Problema Solution
Assume a three-month CD purchased for $3000 pays simple interest at an annual rate of 10%. What is the balance at maturity?
Answer provided by our tutors
t = 3 months = 3/12 years = 1/4 year
P = $3,000 principal
r = 0.10 or 10% is the annual rate
A = the balance of maturity
A = P(1 + rt)
A = 3000(1 + 0.10(1/4))
A = $3,075
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the balance at maturity is $3.075.