Answer:
The correct option is: B. $30.00
Step-by-step explanation:
The formula for compound interest is.......
[tex]A=P(1+\frac{r}{n})^n^t[/tex] , where A= Final amount, P= Initial amount, r= rate of interest in decimal form, n= number of compounding in a year and t= time duration in years.
Anthony wants to buy CD for $400 that earns 2.5% APR and is compound quarterly and the CD matures in 3 years.
So here, [tex]P= 400, r=2.5\%=0.025, t= 3[/tex]
As the CD is compounded quarterly, so here [tex]n= 4[/tex]
Plugging these values into the above formula......
[tex]A= 400(1+\frac{0.025}{4})^(^4^*^3^)\\ \\ A= 400(1+0.00625)^1^2\\ \\ A=400(1.00625)^1^2\\ \\ A= 431.053...[/tex]
So, the amount of total interest earned [tex]= (\$431.053...-\$400)=\$31.053... \approx \$30.00(Approximately)[/tex]
