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March 26, 2017

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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.

  • math - ,

    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.

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