Gustavo's bank offers 0.75% APY on money held in savings accounts and 4% APY on money held in a 12-month CD account. Gustavo decides to deposit $5,000 in the CD account to maximize his interest earnings. Assuming the money would remain in either account for 12 months, how much more will he earn by putting his money into the CD?
D
1 dollars comma 250 point 0 0The CD earns 4% of $5,000 in 12 months, while the savings account earns 0.75%. The difference is 4% − 0.75% = 3.25%, and 0.0325 × $5,000 = $162.50. Gustavo will earn $162.50 more with the CD, which is choice B.
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