Asked by Cash In Black on Sep 22, 2024
Verified
Robert placed $7,000 in a 10-month term deposit paying 6.25%. How much will the term deposit be worth when it matures?
A) $3,645.83
B) $7,991.81
C) $7,364.58
D) $6,653.46
E) $7,769.89
Paying
The act of disbursing or settling a financial obligation.
Term Deposit
A fixed-term investment held at a financial institution that pays interest at a specified rate and matures on a predetermined date.
Matures
The point in time when a financial instrument, such as a bond, CD, or loan, reaches its final due date and the principal is to be repaid.
- Calculate the final worth of investments at maturity.
Verified Answer
AM
Ashley McCall5 days ago
Final Answer :
C
Explanation :
The term deposit will be worth $7,364.58 when it matures. This is calculated by adding the interest earned to the principal. The interest can be calculated using the formula: Interest = Principal × Rate × Time, where Time is in years. For a $7,000 deposit at 6.25% for 10/12 year, the interest is $7,000 × 0.0625 × (10/12) = $364.58. Therefore, the total amount at maturity is $7,000 + $364.58 = $7,364.58.
Learning Objectives
- Calculate the final worth of investments at maturity.