Answer:
3314.68
Step-by-step explanation:
3000 dollars is invested in a 5 year CD that pays 2% interest annually.
If the interest is compounded quarterly then the quarterly interest rate is [tex]\frac{2}{4} = 0.5[/tex]% and 5 years is equivalent to (5 × 4) = 20 quarters.
Therefore, the sum will become after 5 years
[tex]3000(1 + \frac{0.5}{100} )^{20} = 3314.68[/tex] dollars.
Hence, the CD will be worth 3314.68 at the end of the 5-year term. (Answer)
Since we know the formula of compound interest as
[tex]A = P(1 + \frac{r}{100 \times n} )^{nt}[/tex]
Where A is the final amount that the sum becomes.
P is the principal amount that was invested initially.
r = Annual rate of compound interest.
And n = number of times in a year the principal is compounded.
