Question

You are going to open a certificate of deposit (CD) that earns simple interest. One bank offers an CD in which you must deposit 500 dollars for 3 years and 2% interest. Another bank offers a CD in which you deposit 250 dollars for 2 years with 3% interest. Which CD will earn more interest?

Answer 1

Answer:

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Answer 2

The case 1 (a certificate of deposit (CD) ) will earn more interest.

What is simple interest?

Simple interest is the interest amount for a particular principal amount of money at some rate of interest.

Simple Interest is calculated using the following formula: SI = P × R × T, where P = Principal, R = Rate of Interest, and T = Time period.

Given

Case 1:

Principal  p = $500

Time t = 3 years

Rate of interest r = 2%

Based on the given conditions

Simple Interest = $\frac{prt}{100}$

= $\frac{500(2)(3)}{100}$

= $30

Case 2:

Principal  p = $250

Time t = 2 years

Rate of interest r = 3%

Based on the given conditions

Simple Interest = $\frac{prt}{100}$

= $\frac{250(3)(2)}{100}$

= $15

The case 1 CD will earn more interest.

Find out more information about simple interest here

https://brainly.com/question/25663053

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