Tom invests $7,808 in a certificate of deposit (CD) that pays 3.8% simple interest per year. How much interest will Tom earn after 3 years? (Express your answer in 2 decimal places.)
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Tom invests $7,808 in a certificate of deposit (CD) that pays 3.8% simple interest per year. How much interest will Tom earn after 3 years? (Express
To calculate the interest earned on a simple interest investment, we can use the formula:
Interest = Principal x Rate x Time
where Principal is the initial investment, Rate is the annual interest rate, and Time is the duration of the investment in years.
In this case, Tom invests $7,808 at a rate of 3.8% per year for 3 years. Using the formula, we get:
Interest = $7,808 x 0.038 x 3
Interest = $886.94
Therefore, Tom will earn $886.94 in interest after 3 years.
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Answer:
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Step-by-step explanation:
The formula for simple interest is:
I = Prt
where I is the interest earned,
P is the principal (the initial amount of money invested),
r is the interest rate per year (as a decimal), and
t is the time in years.
In this problem,
P = $7,808, r = 0.038, and t = 3
Plugging these values into the formula, we get:
I = Prt = $7,808 x 0.038 x 3 = $886.08
Therefore, Tom will earn $886.08 in interest after 3 years.