Question

Your fixed expenses are $1,151.65/month. You saved 4 months' worth in an emergency fund, investing 25% in a savings account at a 3.3% APR and the rest in a 60-day CD at a 4.3% APR. How much total interest accrues over 60 days?

$41.04


$43.38


$30.67


$32.23

Answer 1

The correct answer is in fact $30.67

Answer 2

Option c is correct. $30.67

Explanation:

Your monthly fixed expenses are = $1,151.65

You save for 4 months' = 1,151.65 × 4 = $4,606.60

You invested this amount in two accounts.

In savings account = 25% of 4,606.60 = 0.25 × 4,606.60 = $1,151.65

$1,151.65 invested in savings account at 3.3% APR.

Now we calculate the interest of the savings account. In the question given rate 3.3% is annually. We find out only for 60 days.

= 1,151.65 × 0.033 ×
`(60)/(365)`

= 38.00445 ×
`(60)/(365)`

= 6.24730 rounded to $6.25

Total interest for 60 days in savings account is $6.25

First we calculate the Rest amount = 4,606.60 - 1,151.65 = $3,454.95

This amount is invested in CD at 4.3% APR.

Now we calculate the interest of the CD. Here interest rate 4.3% is for a year and we find out only for 60 days.

= 3,454.95 × 0.043 ×
`(60)/(365)`

= 1,48.56285 ×
`(60)/(365)`

= $24.42

Total interest for 60 days in CD is $24.42

Total interest accrues over 60 days

24.42 + 6.25 = $30.67