
How much interest is earned on a CD with a 2 year fixed maturity, if the initial investment is $500 and the annual interest rate is 3.3%?

Interest is blank dollars.

Round your answer to the nearest hundredth.


To calculate the interest earned on a Certificate of Deposit (CD), we use the simple interest formula:

\[
I = P \times r \times t
\]

Where:
- $ I $ is the interest earned,
- $ P $ is the initial investment (principal),
- $ r $ is the annual interest rate (as a decimal),
- $ t $ is the time in years.

Given:
- $ P = 500 $,
- $ r = 3.3\% = 0.033 $,
- $ t = 2 \, \text{years} $.

Substituting these values into the formula:

\[
I = 500 \times 0.033 \times 2
\]

Let me calculate this.The interest earned on the CD over 2 years is **$33.00**.

Do you want further details or have any questions?

Here are 5 related questions to explore:
1. What would the interest be if the investment was for 3 years instead?
2. How much would the total value of the investment be after 2 years?
3. What is the difference between simple interest and compound interest?
4. What if the interest rate increased to 4%—how would that affect the interest?
5. How would monthly interest compounding affect the overall return?

**Tip:** Always confirm whether the interest is compounded (monthly, quarterly, etc.) or if it’s simple interest when considering long-term investments.

How much interest is earned on a CD with a 2 year fixed maturity, if the initial investment is $500 and the annual interest rate is 3.3%?

Learn how to calculate the interest earned on a 2-year CD with a $500 initial investment and a 3.3% annual interest rate. This problem covers the simple interest formula, I = P × r × t, and is suitable for students in Grades 5-7.

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