The value of $100 left in a certificate of deposit for four years that earns 4.5% annually will be:
A) $120.00
B) $119.25
C) $117.00
D) $145.00

Question

Quizplus · Accepted Answer

To calculate the value of the certificate of deposit after four years, we can use the formula: 
A = P(1 + r/n)^(nt) 
where A is the final amount, P is the principal (initial amount), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the number of years.

In this case, we have P = $100, r = 0.045 (4.5% expressed as a decimal), n = 1 (interest is compounded annually), and t = 4. Plugging in these values, we get:

A = $100(1 + 0.045/1)^(1*4) = $119.25

Therefore, the best choice is B.

The Value of $100 Left in a Certificate of Deposit