Question

Kim invested $5000 in a 3 year certificate of deposit (CD) that pays 2.3% interest compounded annually. What will the CD be worth at the end of 3 years?

Answer 1

Explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the amount of money invested.

P represents the principal or amount of money invested.

R represents interest rate on the investment.

T represents the duration of the investment in years.

From the information given,

P = $5000

R = 2.3%

T = 3 years

Therefore,

I = (5000 × 2.3 × 3)/100

I = $345

The total amount that the CD would be worth at the end of 3 years is

5000 + 345 = $5345