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Herman put some money in a 1-year CD that compounds interest monthly, and he made $28.12 in interest the first month. If the interest rate of the CD stays the same, how much will he make in interest the second month?

User Dvs
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2 Answers

1 vote
I’m sure the answer is More than $28.12, since it compounds monthly.
User Dawsy
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Answer:

If the interest rate of the CD stays the same, the interest in the second month will be more than $28.12.

Explanation:

Herman put some money in a 1-year CD that compounds interest monthly, and he made $28.12 in interest the first month.

If the interest rate of the CD stays the same, the interest in the second month will be more than $28.12.

This is because, the interest is compounded monthly and interest on interest earns more.

Every month thereafter will be a little more than the one before it.

User Suraj Kothari
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