If i invest 1000 dollars to a investment cd with a rate of 2.0% for 7 months what would i make on interest?
Answer:
Not very much. You get more for opening a new acct with a bank! (or just about anywhere else)
Anyways, the formula is $1000 X (1+0.02)^(7/12) = total incl interest = 1011.62
Thus, you'd earn a whopping $11.62 interest!
You would do better with either a regular savings account at a credit union or buying t-bills from http://www.treasurydirect.gov.
If it's compounded monthly
$1000*(1+.02/12)^7 ~ $1011.73
$11.66 you gave no info. so it wasn't compounded straight interest.
about 14$
I agree with 11.66 or 11.67 depending on how you round but the reality is that you lost $5.83 of buying power at the end of the seven months because the 3% national average inflation not only eat up the $11.66 but took an additional $5.83 from your initial investment of $1000.00 leaving you with the purchasing power of only $994.17 (unless of course we're are talking about gas - in which case you might be able to fill your gas tank a couple times with the money you will have 7 months from now)
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