A CD, or “certificate of deposit,” is a type of savings account with a fixed rate and term, meaning you can only redeem it when the term is over. If you open a CD with an initial deposit of $700 and an APR of 0.23% compounded monthly, what profit will you have earned when you redeem the CD in 10 years? Round your answer to the nearest cent, if necessary.

To solve the problem of finding the profit earned from a Certificate of Deposit (CD) compounded monthly, we will use the compound interest formula:

\[
A = P \left(1 + \frac{r}{n}\right)^{nt}
\]

Where:
- $A$ is the amount of money accumulated after interest.
- $P$ is the principal amount (the initial deposit), which is $700.
- $r$ is the annual percentage rate (APR) expressed as a decimal, which is $0.23\% = 0.0023$.
- $n$ is the number of times interest is compounded per year (monthly compounding, so $n = 12$).
- $t$ is the time the money is invested for in years, which is 10 years.

### Step 1: Plug values into the formula
\[
A = 700 \left(1 + \frac{0.0023}{12}\right)^{12 \times 10}
\]

Now, let's calculate this step-by-step to determine the final amount, and then subtract the initial deposit to find the profit earned.The profit earned from the Certificate of Deposit (CD) after 10 years, compounded monthly at an APR of 0.23%, is approximately $16.29.

Would you like any additional details or further clarification?

Here are 5 related questions to expand your understanding:
1. What happens to the profit if the APR is increased to 0.5%?
2. How does the frequency of compounding affect the total profit?
3. How would the result change if the term of the CD was only 5 years?
4. What would be the total value of the CD after 10 years?
5. How does compound interest compare to simple interest in terms of profit?

**Tip:** The more frequent the compounding, the greater the interest accrued over time, even with a low APR.

A CD, or 'certificate of deposit,' is a type of savings account with a fixed rate and term, meaning you can only redeem it when the term is over. If you open a CD with an initial deposit of $700 and an APR of 0.23% compounded monthly, what profit will you have earned when you redeem the CD in 10 years? Round your answer to the nearest cent, if necessary.

Find out how to calculate the profit earned from a $700 Certificate of Deposit (CD) compounded monthly at 0.23% APR over 10 years. This solution uses the compound interest formula to determine the exact profit, rounding to the nearest cent. Suitable for students in Grades 9-12 studying compound interest and exponential growth.

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