Lori buys a $459 certificate of deposit (CD) that earns 5.6% interest that compounds monthly.
Compound interest formula is
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
P = principal amount
r = annual rate of interest
t = number of years
A = amount of money after n years, including interest.
n = number of times the interest is compounded per year
Given P = 459
r= 5.6% = 0.056
t = 6
compounded monthly means n = 12
Plug in all the values in the formula
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
[tex]A=459(1+\frac{0.056}{12})^{12*6}[/tex]
[tex]A=459(1.00467)^{72}[/tex]
A= 456* 1.3982456
A= 637.60
CD will be $637.60 worth in 6 years
