Question

Would you make more interest by investing 5,000 dollars in a 6-month certificate of deposit (CD) at 6% interest or by investing 3,000 dollars in a 12-month CD at 4% interest? Show your work.

Answer 1

2500 x 1.03 = 2575
2575 x 1.03 = 2652.25
2652.25 x 1.03 = 2731.8175
2731.8175 x 1.03 = 2813.772
2813.772 x 1.03 = 2898.185186
2898.185186 x 1.03 = $2985.13
$2985.13 - $2500 = $485.13 made in 6 months

$1000 x 1.03^12 = $1425.76
$1425.76 - $1000 = $425.76 made in 12 months