Question

$10,000 in a C.D. earning 6% interest compounded annually. How much interest is earned at of first year?What's the value of C.D. at end of first year?What's value of C.D. at end of second year?

Answer 1

A = P( 1+r/n) ^(nt) where A is the amount in the account, P is the principal, r is the rate and n is the number of times it is compounded

A = 10000( 1+.06/1) ^ 1*1

A = 10600

The interest is the 10600-10000 = 600 dollars

The amount in the account is 10600

For the second year

A = 10000( 1+.06/1) ^ 1*2

A = 11236

For the third year

A = 10000( 1+.06/1) ^ 1*3

A = 11910.16

For the 10th year

A = 10000( 1+.06/1) ^ 1*10

A = 17908.48