The Thompsons have an annual income of $50,000. They budget 9% for savings. They invested 60% of their savings in a one-year CD. The CD earns 11 1/2% annual interest. (37) How much do the Thompsons save each year? (38) How much did they invest in a one-year CD? (39) How much interest did the CD earn in one year? (40) If they left the interest with the CD, what was its value at the end of the year?

Question

The Thompsons have an annual income of $50,000.  They budget 9% for savings.  They invested 60% of their savings in a one-year CD.  The CD earns 11 1/2% annual interest.  (37) How much do the Thompsons save each year?  (38) How much did they invest in a one-year CD?  (39) How much interest did the CD earn in one year?  (40) If they left the interest with the CD, what was its value at the end of the year?

anonymous · Answer

37. Save:                  9% * 50,000 = $ 4, 500
38. CD invested:    60% * 50,000 = $ 30,000
39. CD earns:  I = 11.5% * 30,000 = $ 3,450   
40. End of year value: 30,000 + 3,450 = $33, 450