Find how much interest $25,000 earns in 4 years in a certificate of deposit paying 8.5% interest compounded quarterly.
4*4 = 16 compounds
8.5/4 = 2.125% = .02125
1.02125^16 = 1.39995
* 25,000 = 34,998.80 final value
- 25,000 = 998.80 interest
looks like Damon lost about $10,000
interest should have been
$9,998.80
Sorry about that.
25,000 earns 4years deposit 9.5% compound quartely
4579.89
To calculate the interest earned on a certificate of deposit (CD), we can use the formula for compound interest:
A = P * (1 + r/n)^(nt)
Where:
A is the final amount including interest
P is the principal amount (initial deposit)
r is the annual interest rate (in decimal form)
n is the number of times interest is compounded per year
t is the number of years
In this case, the principal amount (P) is $25,000, the annual interest rate (r) is 8.5% (or 0.085 in decimal form), the interest is compounded quarterly, so the number of times interest is compounded per year (n) is 4, and the number of years (t) is 4.
Plugging these values into the formula, we can calculate the final amount (A), which includes the interest earned:
A = 25000 * (1 + 0.085/4)^(4*4)
Calculating this using a calculator or a spreadsheet, we find that A ≈ $33,966.72.
To find the interest earned, we subtract the principal amount from the final amount:
Interest earned = A - P = $33,966.72 - $25,000 = $8,966.72
Therefore, the interest earned on the $25,000 CD over 4 years at an 8.5% annual interest rate compounded quarterly is approximately $8,966.72.