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Answer :
To find the interest earned on a Certificate of Deposit (CD) with a fixed maturity, we'll use the simple interest formula:
[tex]\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \][/tex]
Here is the breakdown of the calculation:
1. Principal (Initial Investment): This is the starting amount of money invested in the CD. In this case, it is \[tex]$940.
2. Annual Interest Rate: The rate at which the investment earns interest each year. The annual interest rate here is 2.6%, which we convert to a decimal for calculation by dividing by 100. So, it becomes 0.026.
3. Time (in years): The duration for which the money is invested. Here, the time period is 2 years.
Now, substitute these values into the formula:
\[ \text{Interest} = 940 \times 0.026 \times 2 \]
After performing the multiplication, the interest earned over the 2-year period is \$[/tex]48.88.
So, the total interest earned on the CD is \$48.88.
[tex]\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \][/tex]
Here is the breakdown of the calculation:
1. Principal (Initial Investment): This is the starting amount of money invested in the CD. In this case, it is \[tex]$940.
2. Annual Interest Rate: The rate at which the investment earns interest each year. The annual interest rate here is 2.6%, which we convert to a decimal for calculation by dividing by 100. So, it becomes 0.026.
3. Time (in years): The duration for which the money is invested. Here, the time period is 2 years.
Now, substitute these values into the formula:
\[ \text{Interest} = 940 \times 0.026 \times 2 \]
After performing the multiplication, the interest earned over the 2-year period is \$[/tex]48.88.
So, the total interest earned on the CD is \$48.88.
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