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Homework answers / question archive / The South bank pays 5

The South bank pays 5

Finance

The South bank pays 5.60%, compounded daily (based on 360 days), on a 9-month certificate of deposit. If you deposit $20,000 you would expect to earn around in interest.

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As the interest is compounded daily, the interest  
rate per day in decimals = 0.056/360 and the  
number of days compounded will be 30*9 = 270  
days.  
Therefore, the total amount, including interest, after 9 months = $20,000*(1+0.056/360)^270 = $     20,857.82
Amount earned as interest = $20,857.82-$20,000 = $ 857.82

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