Question

If you deposit $200 into a CD (Certificate of Deposit) with an interest rate of 1% for 3 years, how much simple interest will you earn after
THREE years?
O $1
$5
$6
$25

Answer 1

Answer:

$6

Step-by-step explanation:

A=P(1+i.n)

A=200(1+0.01.x 3)

A=206

Thus 206 - 200 = $6

Answer 2

You will earn $6 in interest.

The interest you will earn per year is:

= Interest rate x Amount deposited

= 200 x 1%

= $2

Because it is simple interest, you will earn the same amount of interest every year. In 3 years you will have:

= Interest per year x number of years

= 2 x 3

= $6

You will therefore earn $6 in interest.

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