Enter the total CD sale price ($) and the total CD purchase price ($) into the calculator to determine the CD Profit.
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CD Profit Formula
The following formula is used to calculate the CD Profit.
CDP = SP - P
- Where CDP is the CD Profit ($)
- SP is the total CD sale price ($)
- P is the total CD purchase price ($)
How to Calculate CD Profit?
The following example problems outline how to calculate CD Profit.
Example Problem #1:
- First, determine the total CD sale price ($). In this example, the total CD sale price ($) is given as 5000.
- Next, determine the total CD purchase price ($). For this problem, the total CD purchase price ($) is given as 4200.
- Finally, calculate the CD Profit using the equation above:
CDP = SP – P
The values given above are inserted into the equation below:
CDP = 5000 – 4200 = 800 ($)
FAQ
What is a Certificate of Deposit (CD)?
A Certificate of Deposit (CD) is a type of savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in return, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest.
How does the interest rate on a CD affect its profit?
The interest rate on a CD directly affects its profit because the higher the interest rate, the more money the CD will earn over its term. The interest rate, along with the term length and the amount of money deposited, determines the total return on the CD investment.
Can you lose money on a Certificate of Deposit?
Under normal circumstances, you cannot lose the principal amount in a CD if it is held to maturity. However, if you withdraw funds from your CD before it matures, you may have to pay an early withdrawal penalty, which could reduce your initial investment depending on the penalty amount and how much interest has accrued.
