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26 October, 00:58

Suppose you found a CD that pays 4.9% interest compounded monthly for 4 years. If you deposit $10,000 now, how much will you have in the account in 4 years? (Round to the nearest cent.)

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  1. 26 October, 01:53
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    =$11,580.00

    Explanation:

    The CD pays 4.9 percent compounded monthly for four years.

    In one year, there will be 12 occasions of compounding; after four years, there would be 12 x 4 = 36 compounds.

    The interest rate per year is 4.9 percent; monthly interest will be 4.9 / 12, which is 0.4083 percent.

    The amount in four years is the same as the future value after four years.

    =FV = PV (1+r) n

    Pv = $10,000

    r=0.4083 %

    N = 36

    Fv = 10,000 (1+0.4083/100) 36

    =10,000 (1+0.004083) 36

    =$10000 x 1.1579932

    =$11,579. 932

    =$11,580.00
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