Question
Suppose you currently have $2,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 4%interest, compounded annually. How much will you have
Suppose you currently have $2,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 4%interest, compounded annually. How much will you have when the CD matures? ($2,249.73) How would your answer change if the interest rate were 5%, or 6%, or 20%? ( Hint: With a calculator, enter N = 3, I/YR = 4, PV = 2000, and PMT = 0, then press FV to get 2,249.73. Then, enter I/YR = 5 to override the 4%and press FV again to get the second answer. In general, you can change one input at a time to see how the output changes.) ($2,315.25; $2,382.03; $3,456.00)
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