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Answer :
To calculate the amount of interest earned on a Certificate of Deposit (CD) with a fixed maturity, we can use the simple interest formula. Here's a step-by-step solution:
Simple Interest Formula:
[tex]\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \][/tex]
Where:
- [tex]\(\text{Principal}\)[/tex] is the initial amount invested.
- [tex]\(\text{Rate}\)[/tex] is the annual interest rate (in decimal form).
- [tex]\(\text{Time}\)[/tex] is the time the money is invested for, in years.
Given:
- Principal = \[tex]$940
- Annual interest rate = 2.6% = 0.026 (in decimal form)
- Time = 2 years
Steps:
1. Convert the percentage rate to a decimal:
\[
\text{Rate} = \frac{2.6}{100} = 0.026
\]
2. Substitute the values into the simple interest formula:
\[
\text{Interest} = 940 \times 0.026 \times 2
\]
3. Calculate the interest:
\[
\text{Interest} = 940 \times 0.026 = 24.44
\]
\[
24.44 \times 2 = 48.88
\]
4. Round the result to the nearest hundredth:
- The result is already to the hundredth: \(48.88\).
So, the interest earned on the CD over 2 years is \(\$[/tex]48.88\).
Simple Interest Formula:
[tex]\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \][/tex]
Where:
- [tex]\(\text{Principal}\)[/tex] is the initial amount invested.
- [tex]\(\text{Rate}\)[/tex] is the annual interest rate (in decimal form).
- [tex]\(\text{Time}\)[/tex] is the time the money is invested for, in years.
Given:
- Principal = \[tex]$940
- Annual interest rate = 2.6% = 0.026 (in decimal form)
- Time = 2 years
Steps:
1. Convert the percentage rate to a decimal:
\[
\text{Rate} = \frac{2.6}{100} = 0.026
\]
2. Substitute the values into the simple interest formula:
\[
\text{Interest} = 940 \times 0.026 \times 2
\]
3. Calculate the interest:
\[
\text{Interest} = 940 \times 0.026 = 24.44
\]
\[
24.44 \times 2 = 48.88
\]
4. Round the result to the nearest hundredth:
- The result is already to the hundredth: \(48.88\).
So, the interest earned on the CD over 2 years is \(\$[/tex]48.88\).
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