Michael has been saving his money and wants to invest it. After doing some research he has decided to invest 20,000 into a Certificate of Deposit.The interest rate on the CD is 3% with a term of five years, and the interest is paid out annually. Based on recent inflation, Michael is planning on an annual inflation rate of 2% How much interest will Michael earn on this CD in the first year, based on the nominal interest rate? 400 600 800 1,000

To calculate the interest Michael will earn on the CD in the first year, we need to use the formula for calculating simple interest:<br /><br />Interest = Principal × Rate × Time<br /><br />In this case, the principal is $20,000, the rate is 3% (or 0.03), and the time is 1 year.<br /><br />Plugging in the values, we get:<br /><br />Interest = $20,000 × 0.03 × 1 = $600<br /><br />Therefore, Michael will earn $600 in interest on the CD in the first year, based on the nominal interest rate.