How Do I Calculate a 9-Month Certificate of Deposit?

A certificate of deposit, or CD, is a type of investment account that allows you to deposit cash for a specific number of months, then withdraw it once the account reaches maturity. It's less risky than many other types of investments, like stocks. Many CDs are for terms lasting less than a year -- such as a nine-month CD. Determining the value of a nine-month certificate of deposit requires several calculations.

Divide the rate of the nine-month certificate of deposit by the number of times per year the account is compounded. So for instance, for a nine-month CD that earns 1.75 percent and is compounded monthly, you'd divide .0175 by 12 (the number of months in a year). If it were compounded daily, quarterly or yearly, you'd divide by 365, 4 and 1, respectively. The result in this example, with monthly compounding, is 0.0014583 (.0175/12).

Multiply the result from the previous step by the number of years you'll hold onto the CD. A nine-month CD will stay open for 0.75 years, and the result is 0.00109375. Add 1 to the amount, which equals 1.00109375.

Take the results to the nth power, where "n" is the number of times the account compounds in a year. Again, that is 12 in this example. You need to use an exponential calculator for this step. The result in this example is 1.00109375^12, or 1.013204.

Multiply this result by the principal amount you're depositing to calculate the value of the nine-month CD. So if you deposited $2,500, the result is 2,500 x 1.013204, or $2,533.01. This figure is what the CD at 1.75 percent, compounded monthly, will be worth after nine months.


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