Answer:
A = $2937.5
Step-by-step explanation:
Given the following data;
Total gifts and scholarships = $900 + $250 + $300 + $1400 = $2850
Therefore, Principal = $2850
Time in years = 36 months/ 12 months = 3 years
Interest = 1% = 1/100 = 0.01
n = 360
To find the future value, we would use the compound interest formula;
[tex] A = P(1 + \frac{r}{n})^{nt}[/tex]
Where;
- P is the principal or starting amount.
- r is annual interest rate.
- n is the number of times the interest is compounded in a year.
- t is the number of years for the compound interest.
Substituting into the equation, we have;
[tex] A = 2850(1 + \frac{0.01}{360})^{360*3}[/tex]
[tex] A = 2850(1 + 0.000028)^{1080}[/tex]
[tex] A = 2850(1.000028)^{1080}[/tex]
[tex] A = 2850(1.0307)[/tex]
A = $2937.5
Therefore, the graduate will have $2937.5 when he cashes in the CD.
