Suppose you have $1,375 and plan to purchase a 5-year certificate of deposit (CD)that pays 3.5% interest,compounded annually.How much will you have when the CD matures?
A) $1,404.44
B) $1,633.07
C) $1,535.08
D) $1,731.05
E) $1,502.42

Question

Quizplus · Accepted Answer

To solve the problem, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the amount at the end of the investment
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years
Plugging in the given values, we get:
A = 1,375(1 + 0.035/1)^(1*5)
A = 1,633.07
Therefore, the answer is choice B.

Suppose You Have $1,375 and Plan to Purchase a 5-Year