A 180-day $3 million CD has a 4.25 percent annual rate quote. If you buy the CD,how much will you collect in 180 days?

Question

Quizplus · Accepted Answer

The formula for calculating the amount collected on a CD is: 
A = P(1 + r/365)^n
where A is the amount collected, P is the principal (in this case, $3 million), r is the annual rate quote (4.25%) and n is the number of days the CD is held (180).

Plugging in the values, we get:
A = 3,000,000(1 + 0.0425/365)^180
A = 3,063,750.33

Rounding to the nearest penny, the answer is $3,063,750. Therefore, the best choice is D.

A 180-Day $3 Million CD Has a 4