I just want to be sure I understand the math. I think the interest is based on this calculation: .05/12 * 6 months * price of CD (i.e. 10,000.00)
2006-09-12 13:21:33 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
It depends on how the interest in calulated. Most banks calculate interest daily.
Y=10,000(1+.05/365)^(365*.5) is the equation. should be just over 250 dollars. I got $10253.13. So that means that the less it is compounded, exmpl. . . monthly or quarterly the less you will earn. but no less than $250
To calculate the interest for any situation
A=P*(1 + (R/k))^(KT)
A = the total you will have at the end
P = your principle or starting amount
R= your rate
K = the amount of period in the year. daily is 365, montly is 12 ect.
T= time in years. 6months is .5
2006-09-12 14:26:26 · answer #1 · answered by tcarrw 3 · 0⤊ 1⤋
You would receive around 2.5% on the amount you put in the cd, a little more depending on how interest is compounded and credited (daily or quarterly). Assuming the 5.00% is the apy (annual percentage yield) which is what you would get if the cd was for a twelve month period.
2006-09-12 13:56:17 · answer #2 · answered by Monie D 3 · 0⤊ 0⤋
The interest rate is for a year. So take your $ times the interest rate and divide by 2 ( if it's a 6 month cd)
2006-09-12 15:12:57 · answer #3 · answered by Papa John 6 · 1⤊ 0⤋
I think you understand the math correctly. If they compound the interest, it might be a few cents more, but you have the idea. 5% for a year is 2.5% for 1/2 year.
2006-09-12 13:47:32 · answer #4 · answered by Carlos R 5 · 1⤊ 0⤋