Using
the formula to calculate simple interest.
I=P*r*n where I=interest,
P=Principle, r=rate and n=number of periods.
To incorporate the number of
periods in months, divide the specified annual rate by the number of months in a year(12). Therefore the calculation will be
i=($1000*5.5%*(30/12))=$137.5.
The total interest earned
is $137.5
And so the cd balance in the bank is calculated as principle+interest.
$1000+$137.5=$1,137.5
