bussiness fianace.

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• You deposit $5,000 into a 3-year certificate of deposit account that pays an annual compound interest of 3.0%. When the CD period is up, you roll the entire balance over into another 3-year CD paying 3.5%. How much will you have at the end of 6 years?

  • bussiness fianace. -

    P = Po(1+r)^n.
    r = 3% / 100% = 0.03 = Annual % rate expressed as a deciml.
    n = 1Comp/yr * 3yrs = 3 Compounding periods.
    P = 5000(1.03)^3 = $5463.64 in 3 yrs.

    P = Po(1+r)^n.
    Po = 5463.64.
    r = 0.035.
    n = 3.
    Plug the given values into the given Eq.
    Answer: P = $6057.64 In 6 yrs.

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