Question

Logan deposits in a CD that pays 3.75% simple interest. He keeps that money in the account for 5 years, but doesn’t make any deposits or withdraws. How much interest will he earn after 5 years? Round your answer to the nearest cent. Make sure to include dollar ($) sign

Answer 1

Using the simple interest formula, Logan would earn $187.50 in simple interest over 5 years, assuming an initial deposit of $1000 with a rate of 3.75%, rounded to the nearest cent.

Step-by-step explanation:

To calculate the simple interest that Logan earns on a CD, we use the simple interest formula, which is: Interest = Principal × Rate × Time. Assuming Logan's initial deposit (the principal) is unknown, the rate is 3.75% and the time is 5 years, we can use the given examples to create a formula.

Following the structure of the examples provided, if Logan's deposit was, for example, $1000, the interest calculation would be:
$1000 × 0.0375 × 5

Doing the calculation:
$1000 × 0.0375 × 5 = $187.50

So, Logan would earn $187.50 in simple interest over 5 years, which is the amount rounded to the nearest cent.