Question

Jerome deposits 3700 in a certificate of deposit that pays 6 1/2% interest, compounded annually. How much does Jerome earn in one year

Answer 1

240.5.

Explanation:

6 1/2 % = 0.065 as a fraction.

The amount after one year is given by 3700 (1 + 0.065)^1

= 3940.5

so the interest is 3940.5 - 3700

= 240.5.