If you had invested only 1 month’s worth of the emergency fund in the saving account at a 3.15% APR and the remainder in the 45-day CD at a 4.65% APR, what is the difference in the interest earned in 45 days when compared with question #3? Round to the nearest penny.
To find the difference in interest earned in 45 days compared with question #3, we first calculate the interest earned in 45 days by splitting the emergency fund as described:
1. Calculate the amount invested in the savings account:
Emergency fund = $10,000
1 month's worth = $10,000 / 6 = $1,666.67
Amount invested in savings account = $1,666.67
APR = 3.15%
Number of days in 45 days = 45/365 = 0.1233 years
Interest earned in savings account = Principle x Rate x Time = $1,666.67 x 0.0315 x 0.1233 = $6.49
2. Calculate the amount invested in the 45-day CD:
Amount invested in 45-day CD = $10,000 - $1,666.67 = $8,333.33
APR = 4.65%
Number of days in 45 days = 45/365 = 0.1233 years
Interest earned in CD = Principle x Rate x Time = $8,333.33 x 0.0465 x 0.1233 = $43.34
Now, calculate the total interest earned in 45 days by adding interest earned in the savings account and CD:
Total interest earned in 45 days = $6.49 + $43.34 = $49.83
The interest earned in 45 days by splitting the emergency fund and investing in the savings account and 45-day CD is $49.83.
Finally, we compare the difference in interest earned in 45 days with question #3:
Interest earned in 45 days (in this scenario) = $49.83
Interest earned in 45 days in question #3 = $52.05
Now, calculate the difference:
$52.05 - $49.83 = $2.22
Therefore, the difference in the interest earned in 45 days when compared with question #3 is $2.22.