Question

You deposit $1500 in an account earning 10.9% interest. Calculate the simple interest earned in 8 months.

Answer 1

Given:

Principal balance = P = $1,500

Annual interest rate = r = 10.9%

Time (in years) = 8 months = 8/12 = 2/3 years

For us to be able to determine the simple interest earned, we will be using the following formula:

`\text{ Simple Interest = SI = }\frac{\text{PRT}}{100}`

We get,

`\text{ SI = }((1,500)(10.9)((2)/(3)))/(100)\text{ = }(10,900)/(100)`
`\text{SI = \$109}`

Therefore, the simple interest earned in 8 months will be $109.