To determine how much interest is earned on a Certificate of Deposit (CD) with a 2-year fixed maturity, given an initial investment of \[tex]$660 and an annual interest rate of 3.4%, we can use the formula for simple interest. Simple interest is calculated as follows:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]
Given the information:
- Principal (initial investment) = \$[/tex]660
- Annual interest rate = 3.4% (which we convert to decimal form: 3.4% = 0.034)
- Time = 2 years
Now, we can plug in the values into the formula:
[tex]\[ \text{Interest} = 660 \times 0.034 \times 2 \][/tex]
First, multiply the principal by the interest rate:
[tex]\[ 660 \times 0.034 = 22.44 \][/tex]
Next, multiply the result by the number of years:
[tex]\[ 22.44 \times 2 = 44.88 \][/tex]
Thus, the interest earned on the CD over 2 years is:
[tex]\[ \text{Interest} = \$44.88 \][/tex]
Rounded to the nearest hundredth, the interest earned is \$44.88.
