Today, thomas deposited $100,000 in a three-year, 12% cd that compounds quarterly.

what is the maturity value of the cd? (a) $309,090.(b) $119,410.(c) $109,270.(d) $142,576.

D. $142,576

Explanation:

Certificates of deposit are financial products that pay a guaranteed rate of interest

Compared with simple interest, compound interest grows your money faster, but it also makes calculating your return a little more challenging. Here’s the formula to calculate the value of an investment that pays compound interest:

A = P(1+r/n)^(nt)

Where A is the total that the CD will be worth at the end of the term, including the amount put in.

P is the principal, or the amount deposited

R is the rate, or annual interest rate, expressed as a decimal.

n is the number of times that interest in compounded every year.

t is time, or the number of years until the maturity date.

P = $100000

R = 12% = 0.12

n = Quarterly = 4

t = 3

So, A = P(1 + r/n)^(nt) becomes

A = 100000 * (1 + 0.12/4) ^ (4 * 3)

A = 100000 * (1 + 0.03)^12

A = 100000 * 1.03^12

A = 100000 * 1.425760886846178945447841

A = 142576.0886846178945447841

A = $142576Approximated

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