Question 1098354
she put 2000 into a cd that earned 7% annual interest simple for 36 months.


formula for future value of an investment at simple interest is:


f = p * (1 + r*n)


f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods.


formula becomes:


f = 2000 * (1 + .07*3)


that's if the time periods are expressed in years.


if the time periods are expressed in months, then the interest rate is per month and the number of time periods is in months.


formula would then becomes f = 2000 * (1 + .07/12 * 36)


the answer will be the same.


to confirm, use the two formulas to get:


f = 2000 * (1 + .07 * 3) = 2420.


f = 2000 * (1 + .07/12 * 36) = 2420.


at the end of the 3 year period, the balance is invested at 14% interest per year compounded annually for 9 years.


the formula there is f = p * (1+r)^n


f is the future value
p is the present value
r is the interest rate per time period.
n is the number of time period.


formula becomes f = 2420 * (1.14)^9


solve for f to get f = 7869.715421


round to 2 decimal and include commas and the answer becomes 7,869.72