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Joanna will graduate from college in two years and she plans to reward herself with a...

Joanna will graduate from college in two years and she plans to reward herself with a trip to Europe after she graduates. Joanna has saved $12,000 and will make no more deposits to the account during the two years. If Joanna has it in a certificate of deposit earning 4% with quarterly compounding, how much will Joanna have for her trip in two years? Use the calculator: _________________ Use the tables: Table _____ Row ____ Column ____ Factor _____ Answer __________ Use the formula: Answer ____________

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Answer #1

Answer:

Given

Deposit D=12000

Annual interest rate =4%

Quarterly interest rate r=4%/4=1%

Number of years =2 years

Number of quarters N=2*4=8 quarters

So Joanna have after two years =D*(1+r)^N=12000*(1+1%)^8=12994.28

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