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.

Answer 1

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

\[
I = P \times r \times t
\]

where:
- \( I \) = interest earned
- \( P \) = principal amount (initial deposit)
- \( r \) = annual interest rate (in decimal)
- \( t \) = time in years

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

Now, plug in the values:

\[
I = 1,150.00 \times 0.10 \times 8
\]

Calculating step by step:

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

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

Thus, the total interest earned by the end of 8 years is \( I = 920.00 \).

Rounding this to the nearest dollar, the interest earned is:

\[
\boxed{920}
\]