Future value (with changing years). Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has $8 comma 000 for his CD investment. If the bank is offering a 3% interest rate, compounded annually, how much will the CD be worth at maturity if Jonathan picks a a. three-year investment period? b. five-year investment period? c. eight-year investment period? d. twenty-year investment period? a. How much will the $8 comma 000 CD investment at 3% interest rate be worth at maturity if Jonathan picks a 3-year investment period?

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facundobuzzetti facundobuzzetti · Answer 1 · 2019-09-16T14:35:21+02:00

Answer:

A) FV= $8714.816

B) FV= $9274.193

C) FV= $10134.16

D) FV= $14449

Explanation:

Giving the following information:

Jonathan has $8000 for his investment.

The bank is offering a 3% interest rate, compounded annually.

To calculate the ending value if the investment, we need to use the Final Value formula.

FV= Present value* (1+interest rate)^number of years

FV= PV*(1+i)^n

A) FV= 8000*(1,03)^3= $8714.816

B) FV= 8000*(1,03)^5= $9274.193

C) FV= 8000*(1,03)^8= $10134.16

D) FV= 8000*(1.03)^20= $14449