Question

Mitchell Huntzberger recently sold his holdings in the stock market for $427,635 and is planning to invest the proceeds in a 3 year bank certificate of deposit with a rate of 4.15%. The amount Mitchell will have when the certificate matures is closest to:
A. $483,115.61.
B. $452,958.83.
C. $378,525.74.

Answer 1

Given,

Proceeds = $427635

Interest rate (r) = 4.15% or 0.0415

Number of years (n) = 3 years

Solution :-

Future value = proceeds x (1 + r)ⁿ

= $427635 x (1 + 0.0415)³

= $427635 x (1.0415)³

= $427635 x 1.12973822337 = $483115.61

The Mitchell will have $483115.61 when the certificate matures.