Question

Your fixed expenses are $1,151.65/month. You saved 4 months' worth in an emergency fund, investing 25% in a savings account at a 3.3% APR and the rest in a 60-day CD at a 4.3% APR. How much total interest accrues over 60 days?
$43.38


$30.67


$32.23


$41.04

Answer 1

Answer:

Total interest over 2 months: 31.10 $

Explanation:

Total amount saved: 1151.65 $/month x 4 month = 4606.6 $

Interest from savings account - 3.3% annually, interest is compounded monthly

$CI = P(1+\frac{r}{n})^{nt}-P$

where CI is compounded interest, P is the principal amount, r is the interest rate, t is the time of investment and n is the number of times interest in compounded per unit t

P = 1151.65 $

r = 3.3% annually = 0.275% monthly

t = 2 months

$CI = P(1+\frac{r}{n})^{nt}-P$

$CI = 1151.65*(1+\frac{0.00275}{1})^{1*2}-1151.65$

$CI = 1151.65*(1.00275)^{2}-1151.65$

$CI = 1157.99-1151.65$

$CI = 6.34$

Interest from CD - 4.3% annually, interest is not compounded

$I = P(1+rt)-P$

where I is interest, P is the principal amount, r is the interest rate and t is the time of investment

P = 3454.95 $

r = 4.3% annually = 0.358% monthly

t = 2 months

$I = P(1+rt)-P$

$I = 3454.95*(1+0.00358*2)-3454.95$

$I = 3454.95*(1.00717)-3454.95$

$I = 3479.71-3454.95$

$I = 24.76$

Total interest over 2 months: 6.34 + 24.76

Total interest over 2 months: 31.10 $

Answer 2

B is the right one .....