Answered

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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?

Sagot :

Answer:

$14,854.85

Explanation:

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

[tex]I=P(1+\frac{r}{n})^{nt}-P[/tex]

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:

[tex]\begin{gathered} I=21000(1+\frac{0.136}{4})^{4\times4}-21000 \\ =21000(1+0.034)^{16}-21000 \\ =21000(1.034)^{16}-21000 \\ =35854.85-21000 \\ I=14854.85 \end{gathered}[/tex]

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

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