Business and finance. Paul invested $5000 in a time deposit. What interest will?

Question

Business and finance. Paul invested $5000 in a time deposit. What interest will
he earn for 1 year if the interest rate is 6.5%?

Answer 1

Is it compounded annually? If so, it is as simple as above.

If it is compounded, well then things get a little hairier. Here is the formula:
End Value = initial value x (1 + interest per period) ^ number of periods. (BTW, the ^ means "raised to" or exponent for those non-nerds out there)

Lets say it is compounded monthly. There are 12 months in the year, so the interest rate per month is: 6.5/12 = 0.542%. And the number of periods is: 12.

So, we have:
EV = 5000(1.00542)^12 = 5000 x 1.067 = 5334.86

Which means that the interest would be $334.86

If it was compounded quarterly, the interest would be 6.5%/4 a and the number of periods in a year would be 4. And, I will leave it up to you to do that math.

Answer 2

Do they teach basic math anymore?

$5000% x 6.5% (0.065) = $325.