Question

Dakota has placed $21,000 in a certificate of deposit(CD) that earns 13.6% interest quarterly per year. The term of the CD is four years. How much money will she have earned at the end of the term?

Answer 1

$14,854.85

Step-by-step explanation:

For a principal (P) saved at compound interest, the amount earned (Interest) is determined using the formula:

`I=P(1+(r)/(n))^(nt)-P`

We have that:

• Principal, P = $21,000

,

• Interest Rate, r=13.6%=0.136

,

• Number of times compounded, n = 4 (Quarterly)

,

• Number of Years, t =4

Substituting these values, we have:

`\begin{gathered} I=21000(1+(0.136)/(4))^(4*4)-21000 \\ =21000(1+0.034)^(16)-21000 \\ =21000(1.034)^(16)-21000 \\ =35854.85-21000 \\ I=14854.85 \end{gathered}`

She would have earned $14,854.85 at the end of the term.