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

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

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

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

Substituting the values into the formula:

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

Now, calculate:

\[
\text{Interest} = 1,150.00 \times 0.10 = 115.00
\]

Then:

\[
\text{Interest} = 115.00 \times 8 = 920.00
\]

Thus, the total interest earned by the end of 8 years is

\[
\boxed{920}
\] dollars.