Today,Thomas deposited $100,000 in a three-year,12% CD that compounds quarterly.What is the maturity value of the CD?

Question

Quizplus · Accepted Answer

First, we need to calculate the quarterly interest rate. 
Quarterly interest rate = Annual rate / 4 = 12% / 4 = 0.03

Next, we need to calculate the number of quarters in three years. 
Number of quarters in three years = 3 years x 4 quarters per year = 12 quarters

Using the formula for compound interest, we can calculate the maturity value of the CD:

Maturity value = Principal x (1 + interest rate)^n 
where n is the number of compounding periods

Maturity value = $100,000 x (1 + 0.03)^12 = $142,576

Therefore, the best choice is C.

Today,Thomas Deposited $100,000 in a Three-Year,12% CD That Compounds Quarterly