Martina received a $1200 bonus. She decided to invest it in a 3-year certificate of deposit (CD) with an annual interest rate of 1.34% compounded daily.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. Assume there are 365 days in each year.
Question
Martina received a $1200 bonus. She decided to invest it in a 3-year certificate of deposit (CD) with an annual interest rate of 1.34% compounded daily.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. Assume there are 365 days in each year.
Solution
You haven't provided a specific question related to the information given. However, I can help you calculate the future value of Martina's investment after 3 years.
Here's how you can do it:
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Identify the variables: Principal (P) = $1200 Annual interest rate (r) = 1.34% or 0.0134 (in decimal form) Number of times interest is compounded per year (n) = 365 (daily compounding) Number of years the money is invested for (t) = 3
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Use the formula for compound interest to calculate the future value (A) of the investment: A = P(1 + r/n)^(nt)
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Substitute the values into the formula: A = 1200(1 + 0.0134/365)^(365*3)
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Calculate the future value: A = 1200(1 + 0.00003671)^1095 A = 1200(1.00003671)^1095 A = 1200*1.0407
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Round to the nearest cent: A = $1248.84
So, after 3 years, Martina's investment will grow to approximately $1248.84.
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