Question about CD's (Bank cds)?I was looking at a cd rate sheet and the 13 month cd has a $500 min deposit. The annual percentage yield is 5.38, and the interest rate is 5.25%. It says compounding and crediting for the cerificate is added/paid monthly. How much will I have at the maturity date if I start with $500. | |
The exact amout you will have at the end of 13 months, for your specifications is
$529.19609124094683644436649735419
Your Formula is :
A = P(1 + r/m)^(mt)
A = Amount at maturity
P = Initial Principal ( 500 )
r = Annual Interest Rate ( 5.25/100 = 0.0525 )
m = Number of times interest is compounded yearly ( for you 12 )
t = # of years (for you it's 1.0833 cuz 13/12 = 1.08333 years)
^ = TO THE POWER OF
Therefore
A = 500 * (1.004375) to the power of 13
A = 500 * 1.0583921824818936728887329947084
A = 529.19609124094683644436649735419
PS is not right. It's 529 roughly.
If 5.25 is compounded monthly divide it by 12. that's.4375% a month. Take the principle times the monthly rate and that is your month end balance. Take that balance and do it again....a totlal of 13 times. And that is your rough balance at the end of 13 months.
the calculation is below:
5000.004375502.1875
502.18750.004375504.3845703
504.38457030.004375506.5912528
506.59125280.004375508.8075895
508.80758950.004375511.0336227
511.03362270.004375513.2693948
513.26939480.004375515.5149484
515.51494840.004375517.7703263
517.77032630.004375520.0355715
520.03557150.004375522.3107271
522.31072710.004375524.5958366
524.59583660.004375526.8909434
526.89094340.004375529.1960912
You will have the original $500 plus the accrued interest of approximately $58.28 for a total of approx. $558.28
I just answered a similar question for someone else. Please go to the website of.......bankrate.com
This is a well known site that computes just what you're looking for. Click on CDs and then follow the menu to what you seek.
