Question

What would be the final value on a certificate of deposit worth $2,000

over a period of 5 years with an interest rate of 2%?

Answer 1

The answer is 2,200 hope you got it right

Answer 2

the "final value" will be $2,200

Explanation:

Assume that this is a case of simple interest (no compounding involved). The appropriate formula is:

A = Prt, where P is the principal, r is the interest rate as a decimal fraction, and t is the number of years.

Here,

Interest = $2,000(0.02)(5) = $200

Adding this $200 in interest to the principal, we find that the "final value" will be $2,200.