A 4 year certificate of deposit pays an annual rate of 8%, compounded daily. The maximum allowable deposit is $17,000. What is the most interest a depositor can earn from the CD? Round the result to the nearest cent.
A) $6,410.35
B) $6,510.45
C) $6,310.25
D) $6,400.34
E) $6,420.36

Question

Quizplus · Accepted Answer

Using the formula for compound interest, A = P(1 + r/n)^(nt), where P = $17,000, r = 0.08, n = 365, and t = 4, the interest earned is A - P = $23,410.35 - $17,000 = $6,410.35.

A 4 Year Certificate of Deposit Pays an Annual Rate