A certificate of deposit earns 0.75% interest every three months. The interest is compounded. What is the value of a $25,000 investment after 8 years?

Given that certificate of deposits earns 0.75% interest every three months, the value of $25,000 after 8 years will be:
A=P(1+r/100)^nt
where:
A=amount
P=principle
r=rate
t=time
n=number of terms
thus:
from the infomation
$25000, r=0.75%, t=8 years, n=12/3=4
thus
A=25000(1+0.0075/100)^(4*8)
A=25000(1.0075)^32
A=$3175.28

Answer Link

slicergiza slicergiza · Answer 2 · 2019-07-06T12:44:42+02:00

Answer:

The value would be approximately $ 31,752.78

Step-by-step explanation:

Since, the amount in compound interest is,

[tex]A=P(1+r)^{nt}[/tex]

Where, P is the principal amount,

t is the number of years,

n is the compounded periods,

r is the rate per period,

Here, P = $ 25,000

t = 8 years,

n = 4 ( the periods of 3 month in a year is 4 )

r = 0.75 % = 0.0075

Hence, the value of the investment would be,

[tex]A=25000(1+0.0075)^{4\times 8}[/tex]

[tex]=25000(1.0075)^{32}[/tex]

[tex]=\$ 31752.7806079[/tex]

[tex]\approx \$ 31752.78[/tex]