Question

Suppose you have $5000 to invest. A certificate of deposit (CD) earns 6% annual interest, while bonds are much riskier,

earn 8% annual interest. You decide to invest $2000 in a (CD) and the balance in bonds. How much interest would you have
earned at the end of one year? How much interest would you have earned compounded annually after 2 years?
Get the first year interest. Also, calculate the second year interest then add it to the first to get total interest after 2 years.
Remember: Interest - Principal x Rate x Time

A. $360, $794.40
B. $120, $240
C. $360, $746.40

Answer 1

b

Explanation:

earned at the end of one year? How much interest would you have earned compounded annually after 2 years?

Get the first year interest. Also, calculate the second year interest then add it to the first to get total interest after 2 years.

Remember: Interest - Principal x Rate x Time