Question

Jerome's average balance checking account pays simple interest of 7.2% annually and he made $5.28 in interest last month. What was Jerome's average balance last month? $880.00 (Apex answer)

Answer 1

$880

Explanation:

The simple interest is 7.2% per year or annually

Therefore to get monthly interest rate we divide 7.2% by 12

= 7.2/12

= 0.6 % per month

$ 5.28 = 0.6 %(average balance)

$ 5.28 = 6/1000

= ($ 5.28 × 1000)/6

= 880

= $ 880

Answer 2

Answer: Yes, the Average balance on the last month is $ 880.

Explanation:

Let P be the balance on last month in his account,

Here, the annual rate of interest = 7.2 %,

Hence, the monthly rate of interest, r =
`(7.2)/(12)` = 0.6 %

Also, the interest for one month with this rate of interest = $ 5.28

And, Time, t = 1 month

Thus, By the formula of simple interest,

`(P* r* t)/(100)=5.28`

`(P* 0.6* 1)/(100)=5.28`

`0.6P=528`

`P=880`

Hence, the balance on the last month = $ 880.