Question

Regina's average balance checking account pays simple interest of 3.6% annually, and she made $2.31 in interest last month. What was Regina's average balance last month?

A. $770.00
B. $77.00
C. $7.70
D. $7700.00

Answer 1

3.6%/12=0.3% monthly
Balance last month
2.31/0.003=770

Answer 2

A. $770.00

Explanation:

We have been given that Regina's average balance checking account pays simple interest of 3.6% annually, and she made $2.31 in interest last month.

We will use simple interest formula to solve our given problem.

`I=Prt`, where,

`I=\text{Amount of interest}`,

`P=\text{Principal amount}`,

`r=\text{Annual interest rate in decimal form}`,

`t=\text{Time}`

Let us convert our given interest rate in decimal form.

`3.6\%=(3.6)/(100)=0.036`

Now we will divide 0.036 by 12 to find the monthly interest rate.

`(0.036)/(12)=0.003`

`\$2.31=P*0.003*1`

`\$2.31=P*0.003`

`(\$2.31)/(0.003)=P`

`P=\$770.00`

Therefore, option A is the correct choice.