SOLUTION: Please help me solve this problem .. Claudia invested $360 in a 3 year CD that pays out 6 percent compounded quarterly. What is the compound interest after 8 years

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Question 1140043: Please help me solve this problem .. Claudia invested $360 in a 3 year CD that pays out 6 percent compounded quarterly. What is the compound interest after 8 years
Answer by greenestamps(13200) About Me  (Show Source):
You can put this solution on YOUR website!


3 years or 8 years?

Generally if a 3 year CD is held for 8 years the interest is only compounded for 3 years. So the final value, and the amount of interest earned, will be the same after 8 years as after 3 years.

6% annual interest --> 1.5% quarterly
3 years = 12 quarters

Value after the initial amount is compounded 12 times:

360%281%2B.015%29%5E12

Amount of interest: Final value minus original $360.