Question

In 9 months' time, how much interest would Tommy earn on his savings of $300 at an interest rate of 5%?

Answer 1

To calculate the interest Tommy would earn in 9 months at a 5% interest rate on a $300 savings, the simple interest formula I = PRT is used, leading to a total interest of $11.25.

Step-by-step explanation:

To calculate the interest Tommy would earn in 9 months on his savings of $300 at a 5% interest rate, we will use the formula for simple interest, which is I = PRT, where:

• P is the principal amount (the initial amount of money)
• R is the annual interest rate (in decimal form)
• T is the time the money is invested or borrowed for, in years

Here, Tommy's principal P is $300, the annual interest rate R is 5% (or 0.05 in decimal form), and the time T is 9 months. Since interest rates are typically given on an annual basis, we need to convert 9 months into years, which is ⅔ or 0.75 years.

Now we'll plug the values into the formula:

I = $300 × 0.05 × 0.75

= $11.25

Therefore, the total amount of interest Tommy would earn in 9 months is $11.25.