Jerome deposits $3,700 in a certificate of deposit that pays 6 1/2 interest, compounded annually. How much interest does Jerome earn in one year?

Question

I need help on my math worksheet please.

Answer 1

If Jerome deposits $3,700 at 6 1/2 % compounded annually what would be his interest earned. He would earn $240.50.

Answer 2

Note that, for this question, the fact that the CD earns compound interest is irrelevant, because it is compounded annually, and the question asks how much it pays in that same period of time: one year.  So, in this case, the answer would be the same whether it was compound or simple interest. 

Answer 3

principle time interest rate

 

$3,700 x 0.065 = $247.80

 

Jerome earns $247.80 by investing $3,700 at 6.5% compounded  annually.