SOLUTION: On Melissa's 6th birthday, she gets a $5000 CD that earns 4% interest, compounded quarterly. If the CD matures on her 13th birthday, how much money will be ava
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Question 1170113: On Melissa's 6th birthday, she gets a $5000 CD that earns 4% interest, compounded quarterly. If the CD matures on her 13th birthday, how much money will be available?
Answer by greenestamps(13200) (Show Source): You can put this solution on YOUR website!
Original value: $5000
annual interest rate: 4%
quarterly interest rate: (1/4) of 4% = 1% = 0.01
quarterly growth factor: 1+0.01 = 1.01
number of quarters in 7 years: 7*4=28
growth factor over 7 years (28 quarters): 1.01^28
value after 7 years: original value, multiplied by the growth factor:
Use a calculator....
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