Explanation on how to work this problem.
Claire has invested $10,000 in a 15 month CD that pays an annualized rate of 9.02% . How much interest will Claire receive at maturity?
Interest = principal * rate * time
I = 10,000 * 0.0902 * 1.25
I = $1,127.50
To calculate the interest Claire will receive at maturity, you can follow these steps:
Step 1: Convert the annual interest rate to a monthly interest rate.
To do this, divide the annual interest rate by 12.
9.02% ÷ 12 = 0.7517% (rounded to four decimal places)
Step 2: Calculate the monthly interest rate as a decimal.
Divide the previous result by 100.
0.7517 ÷ 100 = 0.007517
Step 3: Multiply the monthly interest rate by the amount of the investment.
0.007517 x $10,000 = $75.17
Step 4: Multiply the monthly interest by the number of months in the investment period.
0.007517 x 15 = 0.112755
Step 5: Calculate the total interest earnings.
Multiply the previous result by the initial investment amount.
0.112755 x $10,000 = $1,127.55
Therefore, Claire will receive $1,127.55 in interest at maturity.
To find out how much interest Claire will receive at maturity, we need to follow these steps:
Step 1: Convert the annualized rate to a monthly rate. Since Claire has invested in a 15-month CD, we need to divide the annual rate by 12 to get the monthly rate.
Monthly rate = 9.02% / 12 = 0.7517% (rounded to 4 decimal places)
Step 2: Calculate the total interest earned over the 15-month period by multiplying the monthly rate by the total number of months (15).
Total interest = Monthly rate * Total number of months
Total interest = 0.7517% * 15
Step 3: Convert the percentage to a decimal by dividing by 100.
Total interest = (0.7517 / 100) * 15
Step 4: Multiply the decimal by the initial investment amount to find the interest earned.
Interest earned = Total interest * Initial investment amount
Interest earned = (0.007517 * $10,000)
Therefore, Claire will receive $75.17 in interest at maturity.