If the rate of a 24-month CD is 1.15% compounded daily, how much would need to be set aside in such a CD to have $25,000 at the end of 24-month term?
A) $24,279.41
B) $24,431.57
C) $24,681.23
D) $24,750.34

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we can solve for the amount needed to be invested:
A = P(1 + r/n)^(nt)
Where:
A = amount at the end of 24 months = $25,000
P = principal (what we want to solve for)
r = annual interest rate = 1.15%
n = number of times compounded per year = 365 (since interest is compounded daily)
t = time in years = 2 (since 24 months is 2 years)

Plugging in these values, we get:
$25,000 = P(1 + 0.0115/365)^(365*2)
Simplifying and solving for P, we get:
P = $24,431.57

Therefore, the best choice is B.

If the Rate of a 24-Month CD Is 1