aiesha has an extra $2500 she has saved and d...
aiesha has an extra $2500 she has saved and decides to invest it in a certificate of deposit (cd) at her local bank. the day she stops by, the bank is running a spin - the - wheel special to determine higher - than - usual interest rates. assume the interest on the cd is compounded annually and that aiesha keeps the cd for 5 years. in your spreadsheet, enter an expression to compute the balance. then answer each question. 1. aiesha spins the wheel and lands on an interest rate of 4.3%. assuming she opens the account, what will be her balance when the certificate reaches maturity? 2. what will be the maturity value if she spins a 4.4% interest rate? 3. the cds maturity value at a 1.1% interest rate would be how much? quantity name principal interest rate compounding period time balance expression p r n t p(1 + r/n)^nt question 1 2500.00 0.043 1 question 2 question 3 if aiesha is investing money in an account, it is to have a higher interest rate.
Answer
# Explanation:
## Step1: Identify compound - interest formula
The compound - interest formula is $A = P(1+\frac{r}{n})^{nt}$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal), $n$ is the number of times interest is compounded per year, and $t$ is the number of years. Here, $P = 2500$, $n = 1$ (compounded annually), and $t = 5$.
## Step2: Calculate for 4.3% interest rate
Substitute $P = 2500$, $r=0.043$, $n = 1$, and $t = 5$ into the formula:
$A_1=2500(1 +\frac{0.043}{1})^{1\times5}=2500(1.043)^{5}$.
$A_1=2500\times1.234351\approx3085.88$.
## Step3: Calculate for 4.4% interest rate
Substitute $P = 2500$, $r = 0.044$, $n = 1$, and $t = 5$ into the formula:
$A_2=2500(1+\frac{0.044}{1})^{1\times5}=2500(1.044)^{5}$.
$A_2=2500\times1.240168\approx3100.42$.
## Step4: Calculate for 1.1% interest rate
Substitute $P = 2500$, $r = 0.011$, $n = 1$, and $t = 5$ into the formula:
$A_3=2500(1+\frac{0.011}{1})^{1\times5}=2500(1.011)^{5}$.
$A_3=2500\times1.056141\approx2640.35$.
# Answer:
1. $3085.88$
2. $3100.42$
3. $2640.35$