If You Deposit $5,000 into a CD (Certificate of Deposit)

question 27

Essay

If you deposit $5,000 into a CD (certificate of deposit) that pays 3% simple interest for 5 years, what is its value at maturity?

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Definitions:

First-In-First-Out (FIFO)

An inventory valuation method where the cost of goods sold is based on the cost of the earliest purchased materials, while the cost of ending inventory is based on the cost of the latest purchased materials.

Equivalent Unit

An equivalent unit is a measure used in cost accounting to represent completed units of production in a period, which takes into account both fully completed and partially completed goods.

Conversion Cost

The combined cost of direct labour and manufacturing overhead required to convert raw materials into finished goods.

Direct Labour

Employees who play a fundamental role in the assembly or creation of a company's products, contributing directly to the output.