Question

Mark bought a CD for $500 that earns 3% APR and is compounded annually. The

CD matures in 3 years. How much will this CD be worth at maturity?
O$503.03
O$509.09
O $546.36
O$545.45

Answer 1

Answer: (C) $546.36.

Explanation:

To find the future value of the CD at maturity, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where:

A = the future value of the CD

P = the principal amount (the initial amount invested), which is $500

r = the annual interest rate, which is 3% expressed as a decimal (0.03)

n = the number of times the interest is compounded in a year, which is once annually

t = the time the money is invested for, which is 3 years

Substituting the given values into the formula, we get:

A = 500(1 + 0.03/1)^(1*3)

A = 500(1.03)^3

A = 546.36

Therefore, the CD will be worth $546.36 at maturity. Answer: (C) $546.36.