Question

19. Craig Deloy's bank computes 4.25 percent interest on a daily basis. He had $1,250 in the account

for 20 days. He then makes a deposit of $450 and makes no transactions for 10 days. He then

withdraws $300 and makes no transactions for 8 days.

a. How much interest does he earn in the 38 days total?

Answer 1

Interest he earn in the 38 days total = $2458.57

Explanation:

As given,

Rate of interest (R)= 4.25% = 0.0425

Principal (P)= $1250

Now,

Simple Interest (S.I) for 20 days = P×R×T

= 1250×0.0425×10

= 531.25

⇒Interest for 20 days = $531.25

Now,

Total amount = P + S.I = $1250 + 531.25 = $ 1781.25

As He then makes a deposit of $450 and makes no transactions for 10 days.

⇒Total amount become = $1781.25 + 450 = $2231.25

Now,

S.I for next 10 days = 2231.25×0.0425×10

= 948.28125

⇒Interest for next 10 days = $ 948.28125

∴

Total amount = $2231.25 + 948.28125 = $ 3179.53125

As He withdraws $300 and makes no transactions for 8 days.

⇒Total amount become = $ 3179.53125 - 300 = $ 2879.53125

Now,

S.I for next 8 days = 2879.53125×0.0425×8

= 979.040625

⇒Interest for next 8 days = $ 979.040625

a.)

Interest he earn in the 38 days total = Interest in 20 days + next 10 days + next 8 days

= $531.25+948.28125+979.040625

= $2458.571875 ≈ $2458.57

∴ we get

Interest he earn in the 38 days total = $2458.57