After saving $250, Li invests in a certificate of deposit (CD) that pays 2.6% annual interest. What will be the value of Li’s CD after she has had it for one year? Show your work.
To calculate the value of Li's CD after one year, we need to calculate the interest earned and add it to the principal amount.
Interest earned = Principal amount x Interest rate = $250 x 2.6% = $6.50
Value of the CD after one year = Principal amount + Interest earned = $250 + $6.50 = $256.50
Therefore, the value of Li's CD after one year would be $256.50.
To calculate the value of Li's CD after one year, we need to find the interest earned and add it to the initial amount.
1. Calculate the interest earned:
Interest = Principal * Interest Rate
Interest = $250 * (2.6/100) (2.6% is equivalent to 0.026 as a decimal)
Interest = $6.50
2. Add the interest earned to the initial amount:
Value of CD after one year = Principal + Interest
Value of CD = $250 + $6.50
Value of CD = $256.50
Therefore, the value of Li's CD after one year will be $256.50.
To calculate the value of Li's CD after one year, you can use the formula for simple interest:
Simple Interest = Principal x Interest Rate x Time
Given that Li invested $250 and the annual interest rate is 2.6%, we can substitute these values into the formula:
Interest = $250 x 2.6% x 1 year
First, let's convert the interest rate from a percentage to a decimal by dividing it by 100:
Interest Rate = 2.6% / 100 = 0.026
Now we can calculate the interest earned:
Interest = $250 x 0.026 x 1 year = $6.50
Finally, to get the total value of Li's CD after one year, we need to add the interest earned to the principal amount:
Total Value = Principal + Interest = $250 + $6.50 = $256.50
Therefore, the value of Li's CD after one year will be $256.50.