Assume that a 3 month cd purchased for $2000 pay a simple interest at an annual rate of 10%. how much total interest does it earn ? what is the balance at maturity?

How much total interest does it earn is $50

The balance at maturity is $2,050

a) Total Interest

Using this formula

Total interest=P×R×T

Where:

P=Principal

R=Rate

T=Time

Let plug in the formula

Total Interest=2000×10%×3/12

Total Interest=2000×10%×0.25

Total Interest=$50

b. Balance at maturity

Using this formula

Balance in maturity=CD amount + Total Interest

Let plug in the formula

Balance in maturity =$2000+$50

Balance in maturity =$2050

Inconclusion:

How much total interest does it earn is $50

The balance at maturity is $2,050

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