How much will an investment be worth in four years.

Question

Suzanne and Brian have $1,000.00 to invest. They found a CD paying 1.85% compounded semi-annually. Assuming the rates will not change, how much will their investment be worth in four years?

Answer 1

Note:  Semi annually = twice per year

 

A = p(1+r/n)^nt

A = future amount

p = principle investment = 1000

r = interest rate = .0185

n = number times compounded yearly = 2

t = time in years

 

A = 1000(1+.0185/2)²⁽⁴⁾ = $1,076.44