Question

You have $300,000 that you want to invest in a one year Certificate of Deposit (CD) with a 4% annual interest rate. What will be the value of that CD in a year?

Answer 1

$312,000

Step-by-step explanation:

The value of CD in one year time shall be given as follow:

Value of CD after one year= Current value(1+interest rate)^1

Value of CD after one year=?

Current value=$300,000

interest rate=4%

Value of CD after one year=$300,000(1+4%)^1

=300,000*1.04

=$312,000