Question

Suppose that you put $1,500 into a certificate of deposit that pays 2% per year,
compounded monthly. If you leave the money in that account for 5 years, how
much will this CD be worth when you withdraw your funds?

$1,604.69
$18,150.50
$1,657.62
$19,873.45

Answer 1

$~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\ 1500\\ r=rate\to 2\%\to \frac{2}{100}\dotfill &0.02\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{monthly, thus twelve} \end{array}\dotfill &12\\ t=years\dotfill &5 \end{cases}$

$A=1500\left(1+\frac{0.02}{12}\right)^{12\cdot 5}\implies A=1500\left( \frac{601}{600} \right)^{60}\implies A\approx 1657.62$