Simple Interest Example 1

These are my lecture for University and College level students. Tom and Betty buy a two-year CD that pays 5.1% simple interest from their bank for $150,000. (Many banks pay simple interest on larger CDs and compound interest on smaller CDs.) They invest $150,000, so the principal is P =$150,000. The interest rate is r is 0.051, and the term is t = 2 years. a. Find the interest that the investment earns. b. Find the value of the CD at the end of its term. There are two days from January 3 to January 5; they are January 3 and January 4. The phrase “to January 5” means “up to but not including the fifth.” If the answer wasn’t easily obtained by counting days, we could find it by subtracting 4 2 2 5 2. We start the subtraction with 4, the last day that we want to count. We subtract 2 because we don’t want to include the first two days of the month. By contrast, there are three days from January 3 through January 5; they are January 3, January 4, and January 5. The phrase “through January 5” means to include the fifth. We could calculate this by subtracting 5 2 2 5 3. We start the subtraction with 5, the last day that we want to count. We subtract 2 because we don’t want to include the first two days of the month.