rabjohnamanda
Answered

Looking for trustworthy answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Discover reliable solutions to your questions from a wide network of experts on our comprehensive Q&A platform. Connect with a community of professionals ready to provide precise solutions to your questions quickly and accurately.

Diana put $8000 in a 10-year CD
paying 5% interest compounded
monthly. After 2 years, she
withdrew all her money, and as an
early withdrawal penalty, she paid
back all the interest she made
during the first year. How much
money was Diana left with?

Sagot :

Th amount of money that Diana is left with is $8,430.23.

How much is Diana left with?

The first step is to determine the interest earned in the first year and the total amount that was made in the 2 years.

The formula used to determine the future value with monthly compounding is:

P(1 + r)^( n x m)

Where:

  • P = present value
  • r = periodic interest rate
  • n = number of years
  • m = frequency of compounding

Total amount made in 2 years = $8000 x ( 1 + 5% / 12)^(12 x 2) = 8839.53

Interest earned in the first year = [ $8000 x ( 1 + 5% / 12)^(12) ] - 8000 = $409.29

Amount she is left with =  8839.53 - $409.29 = $8430.23

To learn more about compounding, please check: https://brainly.com/question/18760477

#SPJ1

Thank you for choosing our service. We're dedicated to providing the best answers for all your questions. Visit us again. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.