Question

NEED HELP ASAP PLEASE

Assume that a three-month CD purchased for $3000 pays simple interest at an annual rate of 10%. How much total interest does it earn?

$ ____

What is the balance at maturity? ______

Answer 1

Answers:

• interest = $75
• balance at maturity = $3075

=============================================================

Step-by-step explanation:

The simple interest formula is

i = p*r*t

where in this case,

• p = 3000 = principal (amount deposited)
• r = 0.10 = annual interest rate in decimal form
• t = 3/12 = 0.25 = number of years

So,

i = p*r*t

i = 3000*0.10*0.25

i = 75 is the amount of interest earned

This adds onto the initial deposit to get the final balance when the CD matures (ie when you're able to withdraw the money without penalties)

The balance at maturity is p+i = 3000+75 = 3075 dollars

---------------

In short, you deposit $3000 into the CD and have to wait 3 months for the amount to update to $3075.