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Chapter 17: Q 8. (page 426)

You open a 5-year CD for $1,000 that pays 2% interest, compounded annually. What is the value of that CD at the end of the five years?

Short Answer

Expert verified

$1102.50

Step by step solution

01

Step 1. Definition

The amount is the aggregate of something or the total value.

02

Step 2. Explanation

The principal amountis$1,000. The rate of interestis 2%per annum and the time is5 years and the interestis compounded annually.

$1000(1+5100)2 =$1102.50

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