Question

Joseph inherited $20,600 at the end of his sophomore year of college. He decides to purchase a Certificate of Deposit for the money. He will earn 8% simple interest over the next two years. What will his CD be worth when it reaches its maturity date?

Answer 1

In this case, we'll have to carry out several steps to find the solution.

Step 01:

Data

p = $20600

i = 8% = 0.08 ==> r

t = 2 years

Step 02:

A = P ( 1 + r t )

A = 20600 ( 1 + 0.08 * 2)

A = 23896

The answer is:

His CD will worth $23896.