Question

If you purchased a $10,000 certificate of deposit today with an APR of 12% with monthly compounding, what would the CD be worth when it matures in six years?

must show work/calculation

Answer 1

Future value = Investment Amount * FVIF(r, n)

Where, r = peroidic interest rate (i.e. monthly in our case)

           n = Number of periods

Future value =10,000 * FVIF[(12%/12), (6*12)]

                   = 10,000 * FVIF(1%, 72)

                   = 10,000 * 2.0471

                   = $ 20,471 Answer

Hope you understand the solution.