Question

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

Answer 1

yes

Answer 2

I = (principal) (rate/time) (rate)

Ia = (3000)(0.03/year)(0.5 year)

vs.

Ib = (1000)(.035/yr)(1yr)

calculate and compare.