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.

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.

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... you, 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.

$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...

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...

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