Question

A bank offers a Certificate of Deposit (CD) at a 10% simple interest rate for 8 years. If an investor deposits $1,150.00 into the CD and does not make additional deposits, how much interest will be earned by the end of 8 years? Round to the nearest dollar.(1 point)

Answer 1

To calculate the interest earned on a Certificate of Deposit (CD) using simple interest, you can use the formula:

\[
\text{Interest} = P \times r \times t
\]

where:
- \( P \) is the principal amount (the initial deposit),
- \( r \) is the annual interest rate (in decimal form), and
- \( t \) is the time in years.

In this case:
- \( P = 1,150.00 \)
- \( r = 10\% = 0.10 \)
- \( t = 8 \) years

Now, substituting these values into the formula:

\[
\text{Interest} = 1,150.00 \times 0.10 \times 8
\]

Calculating this step by step:

1. Calculate \( 1,150.00 \times 0.10 \):
\[
1,150.00 \times 0.10 = 115.00
\]

2. Then multiply by \( 8 \):
\[
115.00 \times 8 = 920.00
\]

Thus, the total interest earned by the end of 8 years is **$920**.

Rounding to the nearest dollar, the interest earned is:

\[
\boxed{920}
\]