help with interest rates?

Question

please someone walk me through this.....
i deposit $1000 in to a cd at 5.1% intrest on the first of the month.at the end of the month i will have$1050 (about?)on the first of the next month i deposit another $1000, so i have2050. at the end of that month ill have2100. i deposit another 1000 for a total of 3100.....do i have the right idea? are my numbers right? i want to get into cd's and this is what i see happening for a year.please correct me if i am wrong! i fi keep up at this rate $1000/mo@5.1% how much will i end up with?

Answer 1

tommy, why are you asking people on here.. mom

Answer 2

These are yearly rates. CDs compound daily and use the actual/360 accrual method.

T0 see how much you would have at the end of a month, take the atarting value and multiply by (1+R/360)^N -- where N is the number of days in a month.

For a month with 30 days in it, if you invest $1000 on the first of the month, you will get 29 days of interest if you look at the last day of the month (for the full 30 -- you need to keep it in until the first of the next month). A $1000 investment at 5.1% per year, will get you the following if you keep it there for a month:

28 days $1,003.97
29 days $1,004.12
30 days $1,004.26
31 days $1,004.40

If you started with $1000 on January 1 and put in another $1000 on the first of each month, you would have $12,343.58 on the first of January in the next year (not counting the $1000 you might put in on that day).

Answer 3

You buy a CD at a fixed rate for a fixed term. When you purchase a $1000 CD, it is at a rate of 5.1% for the YEAR (in your example). You would therefore earn $51 interest at the end of one year. Rates fluctuate, so that if you bought another $1000 CD after one month, it might be at a higher rate, or at a lower rate, or perhaps at the same rate. But this will have no effect on the first CD, which is locked in at 5.1% for a year. Therefore, it is not possible to say how much the later CDs will earn, as you do not know what their rates will be when you buy them over the next twelve months.