Gabe deposits 7,000 in a certificate of deposit. The annual interest rate is 4% , and the interest will be compounded quarterly. How much will the certificate be worth in 5 years?

Solution

Gabe deposits 7, 000 in a certificate of deposit. The annual interest rate is 4% , and the interest will be compounded quarterly. How much will the certificate be worth in 5 years?

Solution

Amount : 8541.33

Solution steps

Translate the problem into an equation:

A = 7000 (1 + \frac{0.04}{4})^{4 \cdot 5}

7000 (1 + \frac{0.04}{4})^{4 \cdot 5} = 8541.33027 \dots

Round to the nearest hundredth:

8541.33

Amount : 8541.33

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