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 find the value of Li's CD after one year, we need to calculate the interest earned on the initial deposit of $250.
To calculate the interest earned, we multiply the initial deposit ($250) by the annual interest rate (2.6%) expressed as a decimal:
Interest Earned = Initial Deposit * Annual Interest Rate
= $250 * 0.026
= $6.50
Therefore, Li's CD will be worth the initial deposit ($250) plus the interest earned ($6.50) after one year:
Value of CD after one year = Initial Deposit + Interest Earned
= $250 + $6.50
= $256.50
So, the value of Li's CD after one year will be $256.50.