what is the dollar amount earned on a c.d. of $50,000 @ 5.12%,for 6 months ?

Answer 1

About $1280. Since the rate is annual, that is the total buildup over 12 months. The standard way to calculate this is to simply divide the rate by the number of months you are using (ie 6mo = 0.5 yrs).

I suppose that if you wanted a really exact figure and your interest compounded you could run it through an Excel sheet, but it would still be pretty close to the answer above.

Hope this helps!

Answer 2

It depends on several things you haven't told us. Does the CD earn compounded interest or simple interest? If compounded, how often? Does the financial institution define 6-months as 180 days? 182-days or some other way? Is the 5.12% the interest rate or the Annual Percentage Yield?

Simple interest is what you learned in school, Principal x Rate x Time. I'm assuming that the 6-months is 182-days and the 5.12% is the interest rate.. $50,000 x 5.12% * 182-days / 365 days = $1,276.49

Compounded interest is better than simple interest because your interest earns more interest so you end up with more money at the end of the term. The more frequently the interest is compounded results in more interest too. Daily compounding is the best. The APY is related to the interest rate but takes into account the compounding frequency, the interest disposition and some other things.

You would need a spreadsheet (like Excel) or a book of interest tables to calculate compounded interest. Assuming daily compounding, 5.12% as the interest rate and a 182-day term, you should receive approximately $1,300.03. I'll check this figure when I go to work later this morning.

Sorry, the correct value for daily compounded interest at 182-days should be approximately $1,292.84 with an APY of 5.25%.

Answer 3

1280 is that correct.