Question

Interest Earned. Claire has invested $10,000 in a 24-month CD that pays an annualized rate of 5.93%. How much interest will Claire receive at maturity?

At maturty, the amount Claire will receive in interest is $___ (Round to the nearest cent.)

Answer 1

Claire will receive $1,186 in interest on her 24-month CD with an annualized rate of 5.93% at maturity.

Step-by-step explanation:

To calculate the interest earned by Claire on a 24-month CD at an annualized rate of 5.93%, we will use the formula for simple interest, which is I = Prt, where I is the interest, P is the principal amount, r is the annual interest rate, and t is the time in years.

For Claire's investment:

• P = $10,000 (the principal amount)
• r = 5.93/100 = 0.0593 (the annual interest rate in decimal form)
• t = 24/12 = 2 years (since the CD is for 24 months)

Substituting these values into the formula:

I = $10,000 * 0.0593 * 2

I = $1,186

Therefore, Claire will receive $1,186 in interest at maturity.