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Leonard invested $10,000 in a 4-year certificate of deposit (CD) with 06 Apr 2022, 02:15
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D
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45% (medium)

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71% (02:13) correct 29% (02:06) wrong based on 149 sessions

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Leonard invested $10,000 in a 4-year certificate of deposit (CD) with a guaranteed return of 6% every year. What was the value of the certificate of deposit at the end of 3 years if all returns were rolled back into the CD?

A. $9,606.00
B. $11,636.18
C. $11,800.00
D. $11,910.16
E. $12,032.42
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D
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Leonard invested $10,000 in a 4-year certificate of deposit (CD) with 09 Apr 2022, 15:11
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I assume the question is just asking how much $10,000 will be worth if it earns 6% each year for three years. Because of compounding, we'll earn more than 3*6% = 18% overall, which only leaves D and E. Since we're multiplying the $10,000 investment by 1.06 three times, the exact answer will be 10,000*(1.06^3). That clearly will need to end in 6 (because 1.06^3 = 106^3/100^3, and 106^3 will end in 6) so D is the only possible answer.
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Leonard invested $10,000 in a 4-year certificate of deposit (CD) with 09 Apr 2022, 22:34
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IanStewart
I assume the question is just asking how much $10,000 will be worth if it earns 6% each year for three years. Because of compounding, we'll earn more than 3*6% = 18% overall, which only leaves D and E. Since we're multiplying the $10,000 investment by 1.06 three times, the exact answer will be 10,000*(1.06^3). That clearly will need to end in 6 (because 1.06^3 = 106^3/100^3, and 106^3 will end in 6) so D is the only possible answer.
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Wow. I got to \(10,000*(1.06^3)\) and then was like, "Man, now do I really have to calculate this stuff for the answer". It didn't click me that as per the multiplicity rule of 6, the last digit is always going to be a 6 ! The way you incorporate all the concepts into one is just brilliant. Will try to incorporate that and broaden the usage of different concepts in different cases.
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Leonard invested $10,000 in a 4-year certificate of deposit (CD) with 11 Mar 2026, 11:02
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given P=10k r=6%pa t=3 yrs
(using formula seems cumbersome in the given timeframe)
for 10k 3yrs simple interest is 1800 so A,B,C out, since compound interest should be more than this.
now taking apart the principal amount, the interests on the interest gained will sum up to the compounded value.
yearsimple interest on 10kinterest on interestinterest on interest
I60000
II6006%of 600=360
III6006%of 1200=726%of 36=2.16
either we should sum up all above together with 10k to find the final amount 11910.16
or simply only choice that has a decimal value of 0.16 is the correct choice.
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