Question

The advertisement above shows the terms of a certificate of deposit (CD) at a local bank.

Suppose Robert invests $1,200 in the CD for a period of 3 years. How much interest will he earn? How much will Robert have after 3 years?

Answer 1

1. The interest is $ 117.

2. The amount is $ 1,317.

Explanation:

The following data were obtained from the question:

Principal (P) = $ 1,200

Rate (R) = 3.25%

Time (T) = 3 years

Interest (I) =..?

Amount (A) =...?

1. Determination of the interest.

Principal (P) = $ 1,200

Rate (R) = 3.25%

Time (T) = 3 years

Interest (I) =..?

I = P × R × T / 100

I = 1200 × 3.25 × 3 / 100

I = $ 117

Therefore, the interest is = $ 117

2. Determination of the amount.

This can be obtained as follow:

Interest (I) = $ 117

Principal (P) = $ 1,200

Amount (A) =?

Amount (A) = principal (P) + interest (I)

A = P + I

A = 1200 + 117

A = $ 1,317

Therefore, the amount at the end of 3 years is $ 1,317