Question

Suppose that you invested $4,000 in a CD on January 1, 2015 maturing in 5 years that pays interest of 3% per year compounded monthly and credited at the end of each month. You don't withdraw any money from the CD during its term.

(a)   How much money was in the CD account on February 1, 2015?

(b)  How much money was in the CD account on March 1, 2015?

c)  How much money will be in the CD account on January 1, 2020

d) What is the total amount of interest paid on the CD during these 5 years?

e) What is the effective annual rate of interest on this CD? Your answer should be accurate to four significant figures, and expressed as a percentage.

(f) After how many months will the amount of money in the CD account first be $4,400 or greater?
This means that if you think the money in the CD account will first be $4,400 or greater on March 1, 2015, you should type
2

Answer 1