Question

As 1,000 earns simple interest at the rate of 3% each year. The interest is paid at the end of every month. How much interest will the bond have earned after 3 months?

Answer 1

9514 1404 393

Answer:

$7.50

Explanation:

The monthly interest rate is 3%/12 = 1/4%. The dollar amount of interest earned in 3 months is ...

I = Prt = $1000(0.0025/mo)(3 mo) = $1000(0.0075) = $7.50