The formula to calculate the Certificate of Deposit (CD) is:
\[ CD = P0Deposit \left( 1 + \frac{rAnnual}{nc} \right)^{nc \cdot nt} \]
Where:
Certificate of Deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements.
Initial Deposit Amount is the amount of money required to open a savings or investment account.
Annual Nominal Interest Rate (in decimals) is the periodic interest rate multiplied by the number of periods per year.
Compounding Periods is the number of times compounding will occur during a period.
Number of Years is the total period for which the certificate of deposit is done.
Let's assume the following values:
Using the formula:
\[ CD = P0Deposit \left( 1 + \frac{rAnnual}{nc} \right)^{nc \cdot nt} \]
Evaluating:
\[ CD = 5000 \left( 1 + \frac{0.015}{10} \right)^{10 \cdot 5} \]
The Certificate of Deposit Value is 5389.11791082906.
| Initial Deposit Amount | Annual Nominal Interest Rate | Compounding Periods | Number of Years | Certificate of Deposit Value |
|---|---|---|---|---|
| 1000 | 0.015 | 10 | 5 | 1,077.82358216581224 |
| 2000 | 0.015 | 10 | 5 | 2,155.64716433162448 |
| 3000 | 0.015 | 10 | 5 | 3,233.47074649743672 |
| 4000 | 0.015 | 10 | 5 | 4,311.29432866324896 |
| 5000 | 0.015 | 10 | 5 | 5,389.11791082906075 |
| 6000 | 0.015 | 10 | 5 | 6,466.94149299487344 |
| 7000 | 0.015 | 10 | 5 | 7,544.76507516068523 |
| 8000 | 0.015 | 10 | 5 | 8,622.58865732649792 |
| 9000 | 0.015 | 10 | 5 | 9,700.41223949231062 |
| 10000 | 0.015 | 10 | 5 | 10,778.23582165812149 |