Question

Ethan put $4000 in a 2-year CD paying 5% interest, compounded monthly. After 2 years, he withdrew all his money. What was the amount of the withdrawal? A. $4419.76 B. $4000.00 C. $4254.41 D. $4244.45
2b2t

Answer 1

Answer:

The total amount was $4419.76

Explanation:

The 5% of $4000 is $200 so after a 2 year period added to the amount the original deposit of $4000 then A is the correct and closest equal amount.

Answer 2

Answer: A. $4419.76

WHICH IS APPROXIMATELY $4420

Explanation: To calculate for compound interest we need the formula Amount A = P(1+r/n)^(nt)

P = principal = $4000

r = rate in decimal= 0.05

n= number of months= 24

t = number of years

A= 4000(1+(0.05/24))^(24*2)

A = 4000(1+(2.083*10^-3))^48

A= 4000(1.002083333)^48

A = 4000*1.105055962

A = $4420.22

Approximately $4420