Assume a 30-month CD purchased for $4000 pays simple interest at an annual rate of 5.5%. How much total interest does it earn? What is the balance at maturity?

To calculate the total interest earned, we need to find the interest earned for each year and then add them together.

Step 1: Find the annual interest earned:
Interest = Principal x Rate
Interest = $4000 x 0.055
Interest = $220

Step 2: Multiply the annual interest by the number of years:
Total interest = Annual interest x Number of years
Total interest = $220 x 2.5 (30 months divided by 12 months)
Total interest = $550

Therefore, the total interest earned is $550.

To find the balance at maturity, we need to add the total interest earned to the principal (original deposit).

Balance at maturity = Principal + Total interest
Balance at maturity = $4000 + $550
Balance at maturity = $4550

Therefore, the balance at maturity is $4550.

To calculate the total interest earned and the balance at maturity, we first need to determine the interest earned per period.

Step 1: Determine the interest rate per period
Since the CD pays simple interest at an annual rate of 5.5%, you need to divide this rate by the number of periods per year. In this case, the CD has a 30-month term, so it will have two periods per year (since 12 months = 1 year).

Interest rate per period = Annual interest rate / Number of periods per year
Interest rate per period = 5.5% / 2
Interest rate per period = 2.75%

Step 2: Calculate the interest earned
To find the interest earned per period, multiply the interest rate per period by the principal amount (initial investment).

Interest earned per period = Interest rate per period * Principal
Interest earned per period = 2.75% * $4000
Interest earned per period = $110

Step 3: Determine the total interest earned
Since the CD has a 30-month term with two periods per year, we need to multiply the interest earned per period by the number of periods.

Total interest earned = Interest earned per period * Number of periods
Total interest earned = $110 * 2
Total interest earned = $220

Step 4: Calculate the balance at maturity
To find the balance at maturity, we simply add the interest earned to the principal amount.

Balance at maturity = Principal + Total interest earned
Balance at maturity = $4000 + $220
Balance at maturity = $4220

Therefore, the CD earns a total of $220 in interest and the balance at maturity will be $4,220.

It will earn 0.55 x 4000 = ? annually.

? x 2.5 years = total interest earned.
4000 + interest earned = balance at maturity.