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15 January, 19:40

Kelly invested $5,000 in a CD at Charter Bank. The annual rate is 4.9% compounded monthly. How much is her investment at the end of 8 years? Group of answer choices $2,393,78 $5,000.49 $7,393,78 $82,114.22

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  1. 15 January, 20:09
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    Answer: A = $7,393.78

    Step-by-step explanation:

    Initial amount invested in a CD at Charter Bank is $5000 This means that the principal

    P = 500

    It was compounded monthly. This means that it was compounded 12 times in a year. So

    n = 12

    The rate at which the principal was compounded is 4.9%. So

    r = 4.9/100 = 0.049

    The duration of the investment is 8 years. So

    t = 8

    The formula for compound interest is

    A = P (1+r/n) ^nt

    A = total amount in the account at the end of t years. Therefore

    A = 5000 (1+0.049/12) ^12*8

    A = $7,393.78
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