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4th Edition

Richard N. Aufmann + 3 others

Publisher: Cengage Learning

ISBN: 9781305965584

Chapter 11.2, Problem 51ES

Textbook Problem

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Compound Amount You deposit S5000 in a two-year certificate of deposit (CD) earning 3.1% interest, compounded daily. At the end of the 2 years, you reinvest the compound amount in another 2-year CD. The interest rate on the second CD is 2.2%, compounded daily. What is the compound amount when the second CD matures?

To determine

The Compound amount when the second CD matures.

**Given information:**

P = 5000

r = 3.1% compounded daily

t = 2 years

**Formula used:**

The Compound amount formula is given by

Where P is the original principal invested, A is the compound amount, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years.

**Calculation:**

From the given information, we have

P = 5000

r = 3.1% compounded daily

t = 2 years

Using these values in the compound amount formula,

Mathematical Excursions (MindTap Course List)

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