Question

Ted Rogers is investing $13500 in a bank CD that pays a 10 percent annual interest . How much will the CD be worth at the end of five years?

Answer 1

To calculate the future value of an investment with compound interest, we can use the formula:

`FV=PV(1+r)^n`

Where:

FV is the future value

PV is the present value (initial investment)

r is the interest rate (expressed as a decimal)

n is the number of periods (in this case, five years)

Explanation:

Substituting the given values:

PV = $13,500

r = 10% = 0.10

n = 5

FV = $13,500 * (1 + 0.10)^5

Calculating the result:

FV = $13,500 * (1.10)^5

FV= $21,741

Answer: After 5 years the CD will be worth approximately $21,741.