Maurice purchased a $10,000, 90-day CD that pays 8 percent. How much will Maurice receive when the CD matures? (Round answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Maurice will receive $10,197 when the CD matures. The interest earned on the CD can be calculated using the formula: Interest = Principal × Rate × Time. Here, the principal is $10,000, the annual rate is 8% (or 0.08 as a decimal), and the time is 90 days out of 365 days in a year (for simplicity, assuming a non-leap year). So, the interest earned is $10,000 × 0.08 × (90/365) = $197.26. When rounded to the nearest dollar, the interest is approximately $197. Adding this to the principal amount of $10,000 gives Maurice a total of $10,197 when the CD matures.

Maurice Purchased a $10,000, 90-Day CD That Pays 8 Percent