Juan Has $1,000 That He Would Like to Invest in a CD

Multiple Choice

Juan has $1,000 that he would like to invest in a CD. His bank offers two alternatives, a one-year CD paying 6% or a two-year CD paying 9% per annum. Juan has been reading that interest rates are rising, and, based on his research, he estimates that by year-end the rate on one-year CDs will increase to 10%. What alternative would give Juan the most interest and what would the total interest be?

A) Two one-year CDs returning $120 interest
B) Two one-year CDs returning $160 interest
C) One two-year CD returning $180 interest
D) One two-year CD returning $1,900 interest