Kerry Stutsman has $500 in a saving account earning .45% interest. She is considering buying a 1-year certificate of deposit (CD) that pays 3.25% interest. What will be the annual difference in her interest earnings between the savings account and the CD?

Question

Kerry Stutsman has $500 in a saving account earning .45% interest. She is considering buying a 1-year certificate of deposit (CD) that pays 3.25% interest. What will be the annual difference in her interest earnings between the savings account and the CD?

Answer 1

Multiply: $500.00 x .0045 = $2.25

Remember to move the decimal two places.

$500.00 x .0325 = $16.25

Then subtract $16.25 - 2.25 = $14.00
The annual difference will be $14.00

Answer 2

To calculate the annual difference in interest earnings between the savings account and the CD, we need to find the interest earned in each account.

Step 1: Calculate the interest earned in the savings account:
Interest earned = Principal amount × Interest rate
Interest earned in the savings account = $500 × 0.45% = $2.25

Step 2: Calculate the interest earned in the CD:
Interest earned in the CD = Principal amount × Interest rate
Interest earned in the CD = $500 × 3.25% = $16.25

Step 3: Find the annual difference in interest earnings:
Annual difference in interest earnings = Interest earned in the CD - Interest earned in the savings account
Annual difference in interest earnings = $16.25 - $2.25 = $14

Therefore, the annual difference in interest earnings between the savings account and the CD will be $14.

Answer 3

To find the annual difference in interest earnings between Kerry Stutsman's savings account and the certificate of deposit (CD), we need to calculate the interest earned for each option.

Let's start with the savings account:

1. Calculate the interest earned for the savings account:
- Principal amount = $500
- Interest rate = 0.45% expressed as a decimal = 0.0045
- Interest earned = Principal amount x Interest rate
= $500 x 0.0045
= $2.25

Now let's move on to the CD:

1. Calculate the interest earned for the CD:
- Principal amount = $500
- Interest rate = 3.25% expressed as a decimal = 0.0325
- Interest earned = Principal amount x Interest rate
= $500 x 0.0325
= $16.25

The annual difference in interest earnings between the savings account and the CD can be found by subtracting the interest earned for the savings account from the interest earned for the CD:

Annual difference = Interest earned for the CD - Interest earned for the savings account
= $16.25 - $2.25
= $14.00

Therefore, the annual difference in Kerry Stutsman's interest earnings between the savings account and the CD is $14.00.