JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually.How much will you have when the CD matures?
A) $1,781.53
B) $1,870.61
C) $1,964.14
D) $2,062.34
E) $2,165.46

Question

Quizplus · Accepted Answer

The amount at maturity can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($1,500), r is the annual interest rate (3.5% or 0.035), n is the number of times that interest is compounded per year (1, since it's compounded annually), and t is the time the money is invested for (5 years). Plugging in the values: A = 1500(1 + 0.035/1)^(1*5) = $1,781.53.

JG Asset Services Is Recommending That You Invest $1,500 in a 5-Year