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QuizMultiple Choice

Other Bank Accounts

Question 1 • Financial Math - MA2007

Haley invests $16,820 in a nine-year CD bearing 5.8% interest, and $21,950 in an online savings account giving 3.0% interest. When the CD reaches maturity, how much more interest will it have generated than the savings account?

Answer
A
$5,129.72
B
$3,650.32
C
$2,853.54
D
$2,276.46

Explanation

Using simple interest, interest equals principal × rate × time. The CD earns $16,820 × 0.058 × 9 = $8,780.04, while the savings account earns $21,950 × 0.03 × 9 = $5,926.50. The CD generates $8,780.04 − $5,926.50 = $2,853.54 more interest, so the answer is choice C, $2,853.54.

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