Question

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?

Answer 1

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