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Popular Word Problems >

Christina invested 4,200 in a certificate of deposit with an annual interest rate of 4% compounded quarterly. What is the value of the certificate of deposit after 20 years?

Solution

C h r i s t ina in v es t e d 4, 200 in a cer t i f i c a t e o f d e p os i t w i t h an ann u a l in t eres t r a t e o f 4% co m p o u n d e d q u a r t er l y . Wha t i s t h e v a l u e o f t h e cer t i f i c a t e o f d e p os i t a f t er 20 ye a rs ?

Solution

Amount : 9310.2

Solution steps

Translate the problem into an equation:

A = 4200 (1 + \frac{0.04}{4})^{4 \cdot 20}

4200 (1 + \frac{0.04}{4})^{4 \cdot 20} = 9310.20391 \dots

Round to the nearest hundredth:

9310.2

Amount : 9310.2

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