Question

Graham deposited $2000 into a CD (Certificate of Deposit) and gained $400 dollars in interest after 4 years. What was the interest rate on the CD?

(A) 5%
(B) 10%
(C) 15%
(D) 20%

Answer 1

The interest rate on the CD is 20%.

Step-by-step explanation:

To calculate the interest rate on the CD, we can use the formula:

Interest Rate = (Interest / Principal) * 100

Given that Graham deposited $2000 and gained $400 in interest after 4 years, we can substitute these values into the formula:

Interest Rate = (400 / 2000) * 100 = 20%

Therefore, the interest rate on the CD is 20%, which corresponds to option (D) in the question.