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 $4400
 and an APR of 0.51%
 compounded monthly, what profit will you have earned when you redeem the CD in 3
 years? Round your answer to the nearest cent, if necessary.

Hint: Recall the future value formula for compound interest, where P is the principal, r is the annual percentage rate (written as a decimal), t is the length of the deposit in years, and n is the number of compounding intervals per year.

To solve this problem, we will use the compound interest formula:

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

Where:
- $A$ is the future value (the amount after interest),
- $P$ is the principal (initial deposit),
- $r$ is the annual percentage rate (APR) as a decimal,
- $t$ is the time in years,
- $n$ is the number of compounding intervals per year.

Given:
- $P = 4400$,
- $r = 0.51\% = 0.0051$,
- $t = 3$ years,
- $n = 12$ (since it's compounded monthly).

We want to find the profit, which is $A - P$.

Let's calculate the future value first.The future value of the CD after 3 years is approximately \$4467.82. The profit earned from the CD is about \$67.82.

Would you like more details or have any questions?

Here are 5 related questions you could explore:
1. What would the profit be if the APR were 1%?
2. How does increasing the compounding frequency affect the profit?
3. What if the deposit period was extended to 5 years?
4. How would the profit change if the initial deposit were \$5,000 instead of \$4,400?
5. What is the difference between simple interest and compound interest for this CD?

**Tip**: The more frequent the compounding, the more interest you can earn over time.

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 $4400 and an APR of 0.51% compounded monthly, what profit will you have earned when you redeem the CD in 3 years? Round your answer to the nearest cent, if necessary.

Find out how to calculate the profit from a certificate of deposit (CD) with an initial deposit of $4400, an APR of 0.51%, compounded monthly over 3 years. Learn how to apply the compound interest formula to solve real-life finance problems. Suitable for high school students in Grades 9-12.

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