Suppose you have $1,500 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)$1,781.53
B)$1,870.61
C)$1,964.14
D)$2,062.34

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) = 1500(1.035)^5 ≈ $1,781.53.

Suppose You Have $1,500 and Plan to Purchase a 5-Year