Question

Isabel put $4,000 into a saving account that pays interest monthly at a simple-interest rate of 2.5% per year. If she takes the interest interest out of the account each month, how much money should she expect to earn after 6 months?

Answer 1

9514 1404 393

Answer:

$49.98

Explanation:

The interest credited to Isabel's account each month is ...

I = Prt

I = $4000·(0.025)(1/12) = $8.33

If she withdraws that amount each month, the original balance is restored, and she will earn the same amount the next month.

Isabel's total earnings in 6 months will be ...

$8.33 · 6 = $49.98