serena has $2,500 to invest in a CD(certificate of deposit) if serena invests the $2,500 in the CD that yields 4% interest, what will the CD be worth after 2 years
200
To calculate the worth of the CD after 2 years, we need to calculate the interest earned and add it to the initial investment.
Step 1: Calculate the interest earned after 2 years.
Interest earned = Principal amount * Interest rate * Time
Interest earned = $2,500 * 4% * 2 years
Step 2: Calculate the interest earned.
Interest earned = $2,500 * 0.04 * 2
Interest earned = $200
Step 3: Add the interest earned to the principal amount.
CD worth after 2 years = Principal amount + Interest earned
CD worth after 2 years = $2,500 + $200
CD worth after 2 years = $2,700
Therefore, the CD will be worth $2,700 after 2 years.
To calculate the worth of the CD after 2 years with a 4% interest rate, you need to use the formula for compound interest:
A = P * (1 + r/n)^(n*t)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case:
P = $2,500
r = 4% = 0.04 (converted to decimal)
n = 1 (compounded once a year)
t = 2 years
Substituting the values into the formula:
A = 2500 * (1 + 0.04/1)^(1*2)
A = 2500 * (1 + 0.04)^2
Now, we can calculate it step by step:
(1 + 0.04) = 1.04
1.04^2 = 1.0816
A = 2500 * 1.0816
A ≈ $2,704.00
Therefore, after 2 years, the CD will be worth approximately $2,704.00.