Question

The boys have earned $135,000 from the sale of their comic books. They gave half of that money to people who study diabetes. If the boys invest the rest of the money in a CD that earns simple interest of five percent a year and matures in 20 years, how much money will each boy have when the CD matures?

A. $33,750
B. $45,000
C. $67,500
D. $90,000

Answer 1

Each boy will have $135,000 when the CD matures.

Step-by-step explanation:

To find out how much money each boy will have when the CD matures, we need to calculate the amount of money they have left after giving half of the $135,000 to people who study diabetes. The boys will have $135,000 / 2 = $67,500 left. Now, we need to calculate the simple interest earned on this amount over 20 years at a rate of 5% per year. The formula for calculating simple interest is: I = P * r * t, where I is the interest, P is the principal amount, r is the rate, and t is the time.

Plugging in the values, we get: I = 67,500 * 0.05 * 20 = $67,500. Therefore, each boy will have $67,500 + $67,500 = $135,000 when the CD matures.