Question

You deposit $1300 into account earning An annual interest rate of 10.5% calculate simple interest earned in eight months

Answer 1

If an amount of money, P, the principal, is invested for a period of t months at a monthly interest rate r, the amount of interest, I, earned is:

I = Prt

In this case, we are given a rate of interest per year, then we must divide it by 12 (12 months equivalent to a year) so we can get the monthly rate, then we get:

`I=P((r)/(12))t`

By replacing 1300 for P, 0.105 (10.5%) for r and 8 for t, we get:

`I=1300((0.105)/(12))8=91`

Then, the simple interest earned after 8 months will be $91