Question

Kim places $1,250 into a bank account that pays 4.25% simple interest. if she does not add or remove any money from the account, how much interest will she earn after 60 months (anwers must be written as money-rounded to the hundred to the place)

Answer 1

The rule of the simple interest is

`I=P* R* T`

P is the initial amount

R is the rate in decimal

T is the time in years

Since Kim places $1250, then

P = 1250

Since the rate is 4.25%, then

`R=(4.25)/(100)=0.0425`

Since the time is 60 months, divide it by 12 to change it to years

`\begin{gathered} T=(60)/(12) \\ T=5 \end{gathered}`

Substitute them in the rule above

`\begin{gathered} I=1250*0.0425*5 \\ I=265.625 \end{gathered}`

Round it to the nearest hundredth

I = $265.63