Calculating Compound Amount and Interest Earned on CD Deposit

What is the compound amount and amount of interest earned on a $5000 deposit at 1.36% compounded semiannually for 3 years?

Calculate the compound amount and interest earned based on the given details.

Answer:

The compound amount is $5446.98 (rounded to the nearest cent) and the interest earned is $446.98 (rounded to the nearest cent).

To calculate the compound amount and the amount of interest earned, we can use the following formula:

A = P(1 + r/n)^(n*t) - P

Where:

A = the compound amount

P = the principal (initial amount) of the deposit

r = the annual interest rate (as a decimal) of the deposit

n = the number of times the interest is compounded per year

t = the time period (in years) of the deposit

Given data:

Principal (P) = $5000

Annual interest rate (r) = 1.36% = 0.0136

Number of compounding periods per year (n) = 2 (compounded semiannually)

Time period (t) = 3 years

Calculations:

Compound amount (A):

A = 5000(1 + 0.0136/2)^(2*3) - 5000 = $5446.98 (rounded to the nearest cent)

Interest earned:

The interest earned can be found by subtracting the principal amount from the compound amount:

Interest earned = Compound amount - Principal amount

Interest earned = $5446.98 - $5000 = $446.98 (rounded to the nearest cent)

Therefore, the compound amount on the $5000 deposit at 1.36% compounded semiannually for 3 years is $5446.98 and the interest earned is $446.98.