At maturity, how much will a deposit of $6,000 in a certificate of deposit (CD) for 10 years at 3% be worth? (Round the answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The formula to calculate the value of a CD at maturity is: 
M = P(1+r/n)^(nt)
Where: 
M = maturity value
P = principal amount
r = annual interest rate in decimal form
n = number of times the interest is compounded per year
t = number of years

Using the given values, we get: 
M = 6,000(1+0.03/1)^(1*10)
M = 6,000(1+0.03)^10
M = 6,000(1.03)^10
M = 6,000(1.343916)
M = 8,063.50

Rounding to the nearest dollar gives us the answer of $8,063, which is option C.

At Maturity, How Much Will a Deposit of $6,000 in a Certificate