Question

Sarah has placed $7,300 in a certificate of deposit(CD) that earns 7% interest semiannually for per year. The term of the CD is three years. How much money will she have earned at the end of the term? *

Answer 1

use the formula for the interest compoundings

$A=p\cdot(1+\frac{r}{n})^{n\cdot t}$

replace in the formula with n=2

calculate the future value

$\begin{gathered} A=(7,300)\cdot(1+\frac{0.07}{2})^{2\cdot3} \\ A=(7,300)\cdot(1+0.035)^6 \\ A=(7,300)\cdot(1.035)^6 \\ \end{gathered}$$A=8,973.56$