Today, Thomas deposited $130,000 in a 2-year, 12% CD that compounds quarterly. What is the maturity value of the CD

The maturity value of the CD is $164,680

Explanation:

The Maturity value of CD is the compounded value of the principal invested in the CD at a specified interest rate.

Use the following formula to calculate the maturity value of CD

Future value = Present value x ( 1 + Periodic Interest rate )^numbers of compounding periods

Where

Present value = Principal Invested = $130,000

Periodic Interest rate = 12% x 3/12 = 3%

Numbers of compounding periods = 2 years x 12/3 = 8 periods/quarters

Future value = Maturity value of the CD = ?

Placing values in the formula

Maturity value of the CD = $130,000 x ( 1 + 3% )^8

Maturity value of the CD = $130,000 x 1.266770081

Maturity value of the CD = $164,680.11

Maturity value of the CD = $164,680 ( Rounded to whole number )

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answer; yield to maturity;