What is the future value of $1000 placed in a 5% CD for one year?

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Multiple Choice

What is the future value of $1000 placed in a 5% CD for one year?

Explanation:
When money is placed in a CD for one year at an annual rate of 5%, the future value is the principal plus the interest earned: 1000 × (1 + 0.05) = 1050. That means you earn 50 in interest over the year, so the amount at maturity is 1050. The other numbers would require a different rate or a different time frame (for example, 1005 would imply 0.5% interest, 950 would be a loss of value, and 1100 would be 10% interest).

When money is placed in a CD for one year at an annual rate of 5%, the future value is the principal plus the interest earned: 1000 × (1 + 0.05) = 1050. That means you earn 50 in interest over the year, so the amount at maturity is 1050. The other numbers would require a different rate or a different time frame (for example, 1005 would imply 0.5% interest, 950 would be a loss of value, and 1100 would be 10% interest).

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