Find the simple interest for a 1-year CD for $5,000 at a 2.5% interest rate.

To calculate simple interest, we use the formula:

\[
\text{Simple Interest (SI)} = P \times R \times T
\]

where:
- $ P $ is the principal amount (initial investment),
- $ R $ is the interest rate per year (as a decimal),
- $ T $ is the time in years.

For this problem:
- $ P = 5000 $
- $ R = 2.5\% = 0.025 $
- $ T = 1 $ year

Plugging in the values:

\[
\text{SI} = 5000 \times 0.025 \times 1 = 125
\]

The simple interest for a 1-year CD of $5,000 at a 2.5% interest rate is **$125**.

Would you like further details, or have any questions? 

Here are some related questions to explore:
1. How does simple interest differ from compound interest?
2. What would the interest be for a 5-year CD at the same rate?
3. How is interest calculated if the rate or time period changes?
4. How much would the total amount be with simple interest added?
5. What happens to the interest if compounded monthly instead?

**Tip:** In simple interest calculations, the interest amount does not increase over time, as it’s only calculated on the principal.

Learn how to calculate simple interest for a 1-year CD with a principal of $5,000 at a 2.5% interest rate. This guide explains the simple interest formula and provides a step-by-step solution suitable for students in Grades 5-7.

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