CD Investing

Tempelritter · #1 Jan 31, 2008, 06:03 PM

Dear Sir,
I have a question about CD's. I would like to know haw you can figure out the rate of interest that you would earn. If I deposit $5000.00 for three months @ 2.8%APR, how much would my investment bring me?
I am new to investing my money and would like to learn how this works. Tank you so much.

oneguyinohio · Jan 31, 2008, 06:09 PM

Multiply the 5000 by the 2.8% then divide that by 4 since you only plan to leave it there for 3 months rather than 12. That should get you pretty close to the amount.

Fastfun1 · Feb 1, 2008, 03:37 PM

Quote:

Originally Posted by oneguyinohio

Multiply the 5000 by the 2.8% then divide that by 4 since you only plan to leave it there for 3 months rather than 12. That should get you pretty close to the amount.

umm... ya, it doesn't get much easier than that. Seeing as though flexible CDs are not longer offered, the 2.8% is not variable. So, $5,000 x 1.28 = $6,400/4 = $1,600. So, you net $650.

oneguyinohio · Feb 1, 2008, 08:10 PM

$650 seems a bit high. It's only 2 point 8 percent interest, not 28...

1000 dollars would bring in $28/year, so 5000 would be $140/year.

Since its only for 3 months, we're looking at about $35....

Fastfun1 · Feb 2, 2008, 06:27 AM

Your right, Ohio. Review my equation, and the error is obvious. Rather than use 1.028, I used 1.28, which would be a rather large yield. Let's try that again: $5,000 x 1.028 = $5,140/4 = $1,285, netting $35. Good call...

oneguyinohio · Feb 2, 2008, 08:27 AM

I just figured the decimal point was hard to see... I've made a lot bigger errors before~



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