Question

Please Help With This Problem!

Kristi wants to invest $18,999 that she won in a raffle lottery. Reliable Bank is offering a 4-year CD with a 3.5% interest rate compounded annually.

A- If Kristi wants to earn more than $2750 in total interest, can she earn this much with the CD from Reliable Bank? Explain.


B- How much will Kristi have in her account after 6 years, if the bank offers a 6-year CD at the same rate? Explain.

Answer 1

Total = Principal*(1 + rate)^years
Total = 18,999 * (1.035)^4
That equals
21801.7894888744 OR
21,801.79 rounded
Interest = 21,801.79 -18,999 =
2,802.79
So, yes she can earn more than $2,700.00 in interest.

Now, for part B

Answer 2

For 6 years:
Total = Principal*(1 + rate)^years
Total = 18,999 * (1.035)^6
Total = 18,999 * 1.2292553263
Total = 23354.6219452194
Equals 23,354.62 (rounded)

Answer 3

Thank you so much!

Answer 4

You are welcome :-)