Question

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.

Answer 1

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