SOLUTION: if I bought a 3 month CD for $5,000.00 @ 5.65 APY, what would I earn for my 3 months, and what if I left it in all year? Thanks

Algebra ->  Finance -> SOLUTION: if I bought a 3 month CD for $5,000.00 @ 5.65 APY, what would I earn for my 3 months, and what if I left it in all year? Thanks      Log On


   

Question 391006: if I bought a 3 month CD for $5,000.00 @ 5.65 APY, what would I earn for my 3 months, and what if I left it in all year?
Thanks
Answer by Alan3354(69443) About Me  (Show Source):
You can put this solution on YOUR website!
if I bought a 3 month CD for $5,000.00 @ 5.65 APY, what would I earn for my 3 months, and what if I left it in all year?
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Assuming the interest is oompounded quarterly:
FV = 5000*(1 + 0.0565/4)
FV = $5070.625
Banks always round down, --> $5070.62 for 3 months
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For 1 yr:
FV = 5000*(1 + 0.0565/4)^4
= $5288.54