A 180-day GIC pays interest at 6.5 percent. How much interest will you earn on $5000 if you hold it to maturity?

Question

Quizplus · Accepted Answer

To calculate the interest earned on a GIC, we use the simple interest formula:

Interest = Principal x Rate x Time

In this case, the principal (or initial deposit) is $5000, the rate is 6.5%, and the time is 180 days (or 0.5 years). Plugging these values into the formula, we get:

Interest = $5000 x 0.065 x 0.5 = $162.50

So you will earn $162.50 in interest if you hold the GIC to maturity. The closest answer choice is B, $160.27. However, this is not exact, so the best choice is still B.

A 180-Day GIC Pays Interest at 6