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Answer :
To find out how much interest is earned on a CD (Certificate of Deposit) with a 2-year fixed maturity, let's work through it step-by-step.
1. Initial Investment: This is the amount of money you start with, which is [tex]$940.
2. Annual Interest Rate: The rate is given as 2.6%. To use this in calculations, we’ll convert it to a decimal. So, 2.6% becomes 0.026 (by dividing 2.6 by 100).
3. Time Period: The CD matures in 2 years.
4. Interest Calculation: The formula to calculate simple interest is:
\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]
Plugging in the given values:
\[
\text{Interest} = 940 \times 0.026 \times 2
\]
5. Calculate the Interest:
\[
\text{Interest} = 940 \times 0.026 \times 2 = 48.88
\]
6. Rounding: The interest is already rounded to the nearest hundredth, which is $[/tex]48.88.
Thus, the interest earned over the 2-year period is $48.88.
1. Initial Investment: This is the amount of money you start with, which is [tex]$940.
2. Annual Interest Rate: The rate is given as 2.6%. To use this in calculations, we’ll convert it to a decimal. So, 2.6% becomes 0.026 (by dividing 2.6 by 100).
3. Time Period: The CD matures in 2 years.
4. Interest Calculation: The formula to calculate simple interest is:
\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]
Plugging in the given values:
\[
\text{Interest} = 940 \times 0.026 \times 2
\]
5. Calculate the Interest:
\[
\text{Interest} = 940 \times 0.026 \times 2 = 48.88
\]
6. Rounding: The interest is already rounded to the nearest hundredth, which is $[/tex]48.88.
Thus, the interest earned over the 2-year period is $48.88.
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