Question

Charlene is going to save her $5,000 year-end bonus, putting the money in a CD offering...

Charlene is going to save her $5,000 year-end bonus, putting the money in a CD offering an APR of 4.50% with quarterly compounding and 4 years to maturity. How much money will she have when the CD matures?

Round your answer to the nearest penny. For example, $2,371.243 should be entered as 2371.24

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Answer #1

Ans:- we will first find the EAR (Effective annual rate) and then we will use the FV function of excel to find the Future Value.

EAR=(1+r/m)^m-1, where r is the annual rate, and m is the number of times compounding.

For FV, Rate=4.58% (EAR), Nper=4, Pmt=0 PV=-5000

Therefore, the FV at the end of year 4 will be $5980. (approx).

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