Find the compound amount for the certificate of deposit. Assume daily compounding using the following table. Round
to the nearest cent.
-Amount: $4,500
Rate: 3%
Years: 4
A)$5,228.22
B)$4,874.78
C)$5,073.71
D)$4,637.04

Question

Find the compound amount for the certificate of deposit. Assume daily compounding using the following table. Round
to the nearest cent. 
-Amount: $4,500
Rate: 3%
Years: 4
A)$5,228.22 
B)$4,874.78 
C)$5,073.71 
D)$4,637.04

Quizplus · Accepted Answer

The correct answer is found by calculating the future value of the investment using the formula for compound interest: $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount ($4,500), $r$ is the annual interest rate (3% or 0.03), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. Assuming the interest is compounded annually (n=1), the calculation is $A = 4500(1 + \frac{0.03}{1})^{1*4}$, which simplifies to $A = 4500(1.03)^4$, resulting in $A ≈ $5,073.71$.

Find the Compound Amount for the Certificate of Deposit