To find the value of Li's CD after one year, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/CD
P = the principal investment amount (initial amount)
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years the money is invested for
In this case,
P = $250
r = 2.6% = 0.026 (as a decimal)
n = 1 (it is compounded annually)
t = 1 (one year)
Plugging these values into the formula:
A = 250(1 + 0.026/1)^(1*1)
= 250(1 + 0.026)^1
= 250(1.026)^1
= 250(1.026)
= $257.75
Therefore, the value of Li's CD after one year will be $257.75.
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
1 answer
1 answer