Assume a six-month CD purchased for $5000 pays simple interest at an annual rate of 9.5%. How much interest does it earn?

Question

Quizplus · Accepted Answer

The interest earned on a CD can be calculated using the formula I = PRT, where I is the interest, P is the principal amount ($5000), R is the annual interest rate (9.5% or 0.095), and T is the time in years (0.5 years for six months). Thus, I = $5000 * 0.095 * 0.5 = $237.50.

Assume a Six-Month CD Purchased for $5000 Pays Simple Interest