Question

William has put $5,000 of savings into a bank that will collect a 1% annual interest rate. Suppose he does not deposit any additional money, how much interest will he earn in 6 months?

Answer 1

William will earn $25 in interest after 6 months on his $5,000 savings with a 1% annual interest rate using simple interest calculation.

Step-by-step explanation:

To calculate the amount of interest William will earn in 6 months on his savings with a 1% annual interest rate, we can use the formula for simple interest:

I = P × r × t

Where:
I = Interest earned
P = Principal amount (the initial amount of money)
r = Annual interest rate (as a decimal)
t = Time the money is invested or borrowed for, in years

William's initial investment (P) is $5,000. Since the interest rate is 1% annually, we convert that to a decimal by dividing by 100, which gives us 0.01. For six months, the time (t) is 0.5 years (6 months = 6/12 years = 0.5 years).

Now, we can apply the values to the formula:

I = $5,000 × 0.01 × 0.5 = $25

Thus, William will earn $25 in interest after 6 months.