If i invested 10,000.00 in a bank CD that pays a 6% annual interest. How much will the CD be worth at the end of five years
To calculate the worth of your CD at the end of five years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt),
Where:
A = Final amount
P = Principal amount (initial investment)
r = Annual interest rate (as a decimal)
n = Number of times that interest is compounded per year
t = Number of years
In this case, the principal amount (P) is $10,000, the annual interest rate (r) is 6% or 0.06, and we are assuming that the interest is compounded annually (n = 1) over a period of 5 years (t = 5).
Using these values, we can now calculate the worth of the CD at the end of five years:
A = 10,000(1 + 0.06/1)^(1*5)
A = 10,000(1 + 0.06)^5
A = 10,000(1.06)^5
A ≈ 12,839.86
So, the CD will be approximately worth $12,839.86 at the end of five years.