Your fixed expenses are $1,500.45/month. Your emergency fund has 4 month’s worth of coverage. You invest half in a savings account with an interest rate of 3.15% APR and the other half in a 45-day CD with an interest rate of 4.65% APR. How much is your total interest in 45 days? Round to the nearest penny.
First, calculate how much money you have in total for your emergency fund:
Total monthly expenses = $1,500.45/month
Emergency fund coverage = 4 months
Total emergency fund = $1,500.45/month x 4 = $6,001.80
Half of the emergency fund is invested in a savings account and the other half in a CD:
Savings account amount = $6,001.80 / 2 = $3,000.90
CD amount = $6,001.80 / 2 = $3,000.90
Next, calculate the interest earned on each investment:
Savings account:
Interest rate = 3.15% APR
Interest earned = $3,000.90 x (3.15/100) x (45/365) = $1.94
CD:
Interest rate = 4.65% APR
Interest earned = $3,000.90 x (4.65/100) x (45/365) = $3.25
Total interest earned in 45 days = $1.94 + $3.25 = $5.19
Therefore, your total interest earned in 45 days would be $5.19.