00:01
Certificates of deposits or cds as they are more commonly known pay simple interest.
00:07
All right now interest when it's talking about simple interest is principal times rate times time.
00:14
This is an investment where you agree to leave your deposit untouched for a fixed amount of time and in exchange you are guaranteed a certain percentage of interest.
00:25
Below are some cd rates listed for june 2019.
00:31
Okay and then we've got it.
00:33
All right a says for a $2 ,500 investment how much more would you earn if you chose sally mae over capital one? okay sally mae's percent is 2 .66 and capital one is 2 .4718.
01:12
All right so we want to know how much more we would earn.
01:15
I'm gonna figure the interest for both of them and we're talking about for just one year.
01:21
So for sally mae we've got 2 ,500 times 0 .0266 and then times 1 so we don't have to figure that.
01:32
Let me see make sure it is just for one year.
01:35
Yeah okay and all right so this is sally mae's and capital one we're gonna take 2 ,500 times 0 .024718 and we're not gonna round that.
01:53
We'll round it when we get the answer in money.
02:01
Okay so for sally mae 2 ,500 times 0 .0266 is $66 .50 and to 2 ,500 times 0 .024718 is $61 .80.
02:26
So does it just say how much more? yeah we're just gonna subtract that and it is $0 .07 that's five now $4 .70 more.
02:42
Okay so that's the answer to a.
02:49
B says if your goal was to earn $100 in interest the first year on that $2 ,500 investment what interest rate would you need to find? okay so we want the interest to be 100.
03:04
So here's what we would do...