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A bank is paying 7.5 percent APR on a CD Note The convention when there are no periodic payments is to assume annual compounding unless stated otherwise?
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∙ 13y ago
A bank is paying 7.5% APR on a CD. (Note: The convention when there are no periodic payments is to assume annual compounding, unless stated otherwise. Thus this is annual compounding.) If you put $2500 into an account, how much will the account be worth in 3 years?
a. 3062.5
b. 3105.74
c. 2505.63
d. 4375
e. insufficient information to compute
The answer is b) 3105.74. After the first year, it is worth $2687.50. After the second year it is worth $2889.06, and after the third year it is worth $3105.74.
Just multiply 0.075 by the amount in the account at the beginning of the year to get the interest for that year, then add that amount to get the new value for the end of that year.
you can get solution from onlinesolutionproviders.com
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∙ 13y ago
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