# Lori buys a \$1,075 certificate of deposit (CD) that earns 3.2% interest that compounds monthly.  How much will the CD be worth in 12 years?

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Lori buys a \$1,075 certificate of deposit (CD) that earns 3.2% interest that compounds monthly.  How much will the CD be worth in 12 years?

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Step 1

Monthly interest rate and future value will be calculated using the formula,

Step 2

The monthly interest rate is calculated by dividing the annual rate with the number of months in a year. The annual rate of interest is 3.2% and hence, the monthly rate of interest comes out to be 0.267%

Step 3

The future value of a lump sum amount is the product of the present value and the future value compounding factor. The present value of ...

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