If you invest $10,000 in a 4-year certificate of deposit (CD) paying 10 percent interest compounded annually, determine how much the CD will be worth at the end of 4 years.
A) $13,600
B) $45,730
C) $14,640
D) $15,958

Question

Quizplus · Accepted Answer

The formula to calculate compound interest is A = P(1+r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate as a decimal, n is the number of times the interest is compounded per year, and t is the number of years. Plugging in the given values, we get A = 10,000(1+0.1/1)^(1*4) = $14,641. Therefore, the best choice is C.

If You Invest $10,000 in a 4-Year Certificate of Deposit