Suppose you found a CD that pays 4.9% interest compounded monthly for 4 years. If you deposit $10,000 now, how much will you have in the account in 4 years? (Round to the nearest cent.)

=$11,580.00

Explanation:

The CD pays 4.9 percent compounded monthly for four years.

In one year, there will be 12 occasions of compounding; after four years, there would be 12 x 4 = 36 compounds.

The interest rate per year is 4.9 percent; monthly interest will be 4.9 / 12, which is 0.4083 percent.

The amount in four years is the same as the future value after four years.

=FV = PV (1+r) n

Pv = $10,000

r=0.4083 %

N = 36

Fv = 10,000 (1+0.4083/100) 36

=10,000 (1+0.004083) 36

=$10000 x 1.1579932

=$11,579. 932

=$11,580.00