Question

Nina's grandmother deposits $3,000 into a savings account for her. The account pays 5.5% simple interest on an annual basis. If she does not add or withdraw money from the account, how much interest will she earn after 21 months? Round to the nearest cent

Answer 1

The amount of interest earned after 21 months is $288.75

Here, we want to calculate the amount of simple interest

To do this, we shall be using the simple interest formula

We have this as;

`\begin{gathered} I\text{ = }(P* R* T)/(100) \\ \end{gathered}`

Where;

I is the simple interest earned that we want to calculate

P is the principal which represents the amount deposited

R is the rate which is 5.5%

T is the time which is 21 months (in cases where time is not in years, we go on to divide the value of the month given by 12)

Thus, we have the substitution as follows;

`I\text{ = }(3000*5.5*21)/(100*12)\text{ = 288.75}`