## Related questions with answers

Question

A $4000 certificate of deposit is purchased for$4000 and is held for eleven years. If the certificate earns an effective rate of 7%, what is it worth at the end of that period?

Solution

VerifiedStep 1

1 of 2$P=\$4000$

$r=7\%=0.07$

$n=11$

Formula,

$S=P(1+r)^{n}$

Find $S$,

$S=4000(1+0.07)^{11}$

$S=4000(1.07)^{11}$

$S=4000 \cdot 2.1048519523$

$S \approx \$8419.4078$

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