Gretchen invested $1000 in a certificate of deposit(CD) that paid intrest at a rate of 9% per year. How much was the CD worth at the end of 3 years?

Question

tkhunny · Answer

What have you tried?  What are the compounding rules?

anonymous · Answer

well my teacher said i was suppost to muliply 1000 by the 9% after changing it to a decimal. then times that by 3 but the answer i got isnt in the answer choice.

tkhunny · Answer

First, let's fix the language.  "times that by" doesn't mean anything.  I sincerely hope your teacher didn't use that langauge.

Second, what should have been communicated was to do the 9% thing three times.

1000*(1.09)*(1.09)*(1.09)  This is annual interest and annual compounding.

anonymous · Answer

first of all my teacher didnt use that language and second its suppost to be like this ;$$1000 \times .09= 90.00 $$ $$90.00 \times 3= 270$$ but its not in the answer choices only 27 is but its already a answer to something else.

tkhunny · Answer

Simple Interest would be that, $270.00 in interest, and thus $1,270.00 total value at the end.

Compound Interest 1000*1.09^3 = $1,295.03

It's probably supposed to be one of those.  It's just not clear what is wanted.  We need a better problem statement, but if that's all you have, we'll ahve to turn it back over to your teacher to explain.

anonymous · Answer

OK thank you very much its 1270. thank you!!!!

tkhunny · Answer

Well, then Simple Interest it is.  The problem statement should tell us that.

Good work!

anonymous · Answer

Yes its very hard for a 8th grader! (my teacher just did an example then gave us this work sheet.)