Dirk opened up a savings account with $600. At a yearly interest rate of 5 percent that is compounded monthly, how much interest will Dirk earn in six months.

Question

asked Jul 6, 2019 131k views

1 Answer

Lwin Htoo Ko · Answer 1 · 2019-07-13T08:36:08+0000

Answer:

Hence final answer is $15.17

Explanation:

Given that Dirk opened up a savings account with $600.

So P=$600

"At a yearly interest rate of 5 percent"

Means r=5% = 0.05

"compounded monthly" means n=12

i= monthly rate of interest = r/n=0.05/12

"how much interest will Dirk earn in six months." means find Interest when time is 6 months

Plug these values into compound interest formula:

$A=P\left(1+i\right)^t$

$A=600\left(1+(0.05)/(12)\right)^6$

$A=600\left(1+0.00417\right)^6$

$A=600\left(1.00417\right)^6$

$A=600\left(1.02528228828\right)$

A=615.169372966

which is approx

A=615.17

Now interest earned will be difference of A and P

Interest =A-P=615.17-600=$15.17

Hence final answer is $15.17