Question

Mark invested $500 in a cd that pays 5% simple interest, calcuated semiannually. How much money will mark earn in 3 years?

Answer 1

Answer: 75

Step-by-step explanation:

Answer 2

Answer: He will earn $75 after 3 years.

Explanation: To calculate Simple Interest, we use the formula:

`i=(PRt)/(100)` .....(1)

where, i = Simple Interest

P = Principle amount

R = Rate of interest

t = Time period

Given:

P = $500

R = 5%

t = semiannually which means
`(1)/(2)` years

As we are asked the total amount earned after 3 years which means 6 half years, so we multiply the interest calculated semiannually by 6 to get the total interest after 3 years.

Putting all the values in equation 1, we get

`i=\left((500* 5* 1)/(100* 2)\right )* 6`

i = $75

Total amount earned after 3 years = i = $75

= $75