SOLUTION: Assume that a 24-month CD purchased for $7000 pays an APY of 3.25% (and of course interest is compounded). How much do you have at maturity? (Round your answer to the nearest cent.

Question 1118739: Assume that a 24-month CD purchased for $7000 pays an APY of 3.25% (and of course interest is compounded). How much do you have at maturity? (Round your answer to the nearest cent.)
Found 2 solutions by addingup, ikleyn:
Answer by addingup(3677) (Show Source): You can put this solution on YOUR website!
how often is it compounded? I will assume it's compounded monthly. Also, it's 24 months, meaning a 2 year length of time.
number of compounding periods: n
length of time: 2
principal (the original amount): P
interest rate: r
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Amount = P(1+r/n)^nt
Amount = 7000(1+0.0325/12)^(12*2)
= 7000(1.00271)^24
= 7000(1.0671)
= 7469.70

Answer by ikleyn(52803) (Show Source): You can put this solution on YOUR website!
.
Your formulation is fatally uncompleted,

since it does not determine the period of time the amount is compounded (yearly ? quartely ? monthly ?)

Depending on the period, the answers will be different.

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