Example: You put $10,000 in a CD for one year. The APY is 3.05%. How much interest does the bank pay you at the end of the year?

Example: You put $10,000 in a CD for one year. The APY is 3.05%. How much interest does the bank pay you at the end of the year?

Answer

To find out how much interest the bank pays at the end of the year, you need to calculate 3.05% of $10,000. 1. First, convert the percentage (APY) into a decimal by dividing by 100: 3.05 / 100 = 0.0305. 2. Next, multiply the principal amount (the initial deposit) by this decimal: $10,000 * 0.0305. 3. Calculation: 10,000 * 0.0305 = 305. The bank pays you $305 in interest at the end of the year.