miguel received a $1200 bonus. he decided to invest it in a 3 - year certificate of deposit (cd) with an…

miguel received a $1200 bonus. he decided to invest it in a 3 - year certificate of deposit (cd) with an annual interest rate of 1.32% compounded annually. answer the questions below. do not round any intermediate computations, and round your final answers to the nearest cent. if necessary, refer to the list of financial formulas. (a) assuming no withdrawals are made, how much money is in miguels account after 3 years? (b) how much interest is earned on miguels investment after 3 years?

miguel received a $1200 bonus. he decided to invest it in a 3 - year certificate of deposit (cd) with an annual interest rate of 1.32% compounded annually. answer the questions below. do not round any intermediate computations, and round your final answers to the nearest cent. if necessary, refer to the list of financial formulas. (a) assuming no withdrawals are made, how much money is in miguels account after 3 years? (b) how much interest is earned on miguels investment after 3 years?

Answer

Explanation:

Step1: Identify compound - interest formula

The compound - interest formula is $A = P(1 + r)^t$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the number of years. Here, $P=$1200$, $r = 0.0132$, and $t = 3$.

Step2: Calculate the amount in the account after 3 years

Substitute the values into the formula: $A=1200\times(1 + 0.0132)^3=1200\times(1.0132)^3$. $(1.0132)^3=1.0132\times1.0132\times1.0132 = 1.039977$. $A = 1200\times1.039977=1247.9724\approx$1247.97$.

Step3: Calculate the interest earned

The interest earned $I$ is given by $I=A - P$. $I = 1247.9724-1200=$47.9724\approx$47.97$.

Answer:

(a) $$1247.97$ (b) $$47.97$