Answer:
Explanation:
Simple Interest (SI) = (Principal × Rate × Time) / 100
Where:
Principal (P) is the initial amount invested, which is $4,000 in this case.
Rate (R) is the annual interest rate, which is 4.5% or 0.045 as a decimal.
Time (T) is the time period in years, and since the CD is for 30 months, you need to convert it to years by dividing by 12 (since there are 12 months in a year).
T = 30 months / 12 months/year = 2.5 years
Now, plug these values into the formula:
SI = (4,000 × 0.045 × 2.5) / 100
SI = (4,000 × 0.1125)
SI = $450
So, the simple interest earned on the 30-month CD purchased for $4,000 at an annual interest rate of 4.5% is $450.