Question

Greg invests $2,680 in a CD paying 7.0% interest, and $3,060 in an online savings account paying 4.5% interest. How much more interest will the CD have earned than the savings account after 1 year?

Answer 1

$49.9 more interest will the CD have earned than the online savings account after 1 year .

Explanation:

Formula

`Interest = (P* R* T)/(100)`

Where P is the principle , R is the rate of interest and T is the time in years .

As given

Greg invests $2,680 in a CD paying 7.0% interest, and $3,060 in an online savings account paying 4.5% interest.

First Part

P = $2680

R = 7.0%

T = 1 years

Put all the values in the formula

`Interest = (2680* 7.0* 1)/(100)`

`Interest = (18760)/(100)`

Interest = $187.6

Thus in CD Greg earns $187.6 interest .

Second Part

P = $3060

R = 4.5%

T = 1 years

Put all the values in the formula

`Interest = (3060* 4.5* 1)/(100)`

`Interest = (13770)/(100)`

Interest = $137.7

Thus in online saving account Greg earns $137.7 interest .

Thus

More interest earns in CD as compared to online = Interest in CD - Interest in online saving account

= $187.6 - $137.7

= $49.9

Therefore the $49.9 more interest will the CD have earned than the online savings account after 1 year .