you are going to open a certificate of deposit $500 for 3 years with 2% interest. another bank offers a CD in which you must deposit $250 for 4 years with 3% interest. Which CD will earn more interest.
500 * 0.02 * 3 = 30
250 * 0.03 * 4 = 30
Why not deposit 500 in the second bank?
To determine which certificate of deposit (CD) will earn more interest, we can calculate the interest earned by each CD.
First, let's calculate the interest earned by the CD with $500 deposit, 2% interest for 3 years:
Interest = Principal x Rate x Time
Interest = $500 x 2% x 3
Interest = $500 x 0.02 x 3
Interest = $30
Therefore, the CD with $500 deposit, 2% interest for 3 years will earn $30 in interest.
Now, let's calculate the interest earned by the CD with $250 deposit, 3% interest for 4 years:
Interest = Principal x Rate x Time
Interest = $250 x 3% x 4
Interest = $250 x 0.03 x 4
Interest = $30
Therefore, the CD with $250 deposit, 3% interest for 4 years will also earn $30 in interest.
Both CDs will earn the same amount of interest, which is $30.
To determine which certificate of deposit (CD) will earn more interest, we need to calculate the interest earned from each CD.
For the first CD with $500 deposited for 3 years at an interest rate of 2%, we can calculate the interest earned using the following formula:
Interest = Principle × Rate × Time
Interest = $500 × 2% × 3 years = $30
So, the first CD will earn $30 in interest.
For the second CD with $250 deposited for 4 years at an interest rate of 3%, we can calculate the interest earned using the same formula:
Interest = Principle × Rate × Time
Interest = $250 × 3% × 4 years = $30
So, the second CD will also earn $30 in interest.
Both CDs will earn the same amount of interest, $30.