Would you make more interest by investing five thousand dollars in a 6-month certificate of deposit (CD) at six percent interest or by investing three thousand dollars in a twelve-month CD at four percent interest? Show your work.

Question

anonymous · Answer

If the interest rates are per annum
then then the basic equation would be 
$$A = P(1+r)^t$$
which for the first case would be 
$$A = 5000(1.06)^{0.5}$$
and the Second case 
$$B=3000(1.04)^{1}$$
A = $5,147.81
B= $3,120.00