How much interest will you earn on $5,000 if you invest the money in a 5-year certificate of deposit earning 3% compounded quarterly. Round your answer to the nearest cent.
P = Po(1+r)^n.
Po = $5,000.
r = (3%/4) / 100% = 0.0075 = Quarterly %
rate expressed as a decimal.
n = 4Comp./yr * 5yrs = 20 Compounding
periods.
Plug the above values into the given Eq.
Answer: $5805.92.