Question

Katherine invests $7,770 in a six-month money market account giving 5.8% simple annual interest and $12,500 in a three-year cd giving 7.25% simple annual interest. Assuming that katherine does not reinvest or renew these investments, how much money will she have when both investments reach maturity, to the nearest dollar?

Answer 1

Answer:

Katherine will receive $23214 to the nearest dollar from both investments.

Step-by-step explanation:

Simple interest = Principal × Time × rate

Le's work out the interest Katherine earns from the two investments.

Money Market Account

Simple interest = 7770 × 5.8/100 × 6/12

= 7770 × 0.058 × 0.5 =  $225.33

So, the amount she gets at maturity is:

$7770 + $225.33= $7995.33

CD account

Simple interest = 12500 × 0.0725 × 3 = $2718.75

The amount she receives at the end of period is:

$12500 + $2718.75 = $15218.75

The total amount she receives from both investments at maturity is:

$15218.75 + $7995.33 = $23214.08

This to the nearest dollar is:

= $23214