Jeff opens a savings account (paying 5% interest) with $1,000 and a CD (paying 6% interest) with $2,000. After one year, how much interest does he earn?

Question

asked Jul 13, 2023 12.5k views

1 Answer

Jacob Wang · Answer 1 · 2023-07-17T12:12:43+0000

Given:

Jeff opens a savings account (paying 5% interest) with $1,000

and a CD (paying 6% interest) with $2,000.

We will find the total interest earned after one year.

We will use the following formula:

$I=P\cdot r\cdot t$

Where: P is the initial saving, r is the interest rate, t is the time

there are two interests earned:

The first, P = 1000, r = 5% = 0.05, t = 1

so,

$I=1000\cdot0.05\cdot1=50$

The second, P = 2000, r = 6% = 0.06, t = 1

$I=2000\cdot0.06\cdot1=120$

So, the total interest will be = 50 + 120 = 170

So, the answer will be $170