Question

Jaycee Alvarez deposits $425 in a savings account at City Bank. The account pays an annual interest rate of

5.5 percent. She makes no other deposits or withdrawals. After three months the interest is calculated. How
much simple interest does her money earn?

Answer 1

Answer: $5.84

Explanation:

Simple interest is calculated using the formula: PRT/100

where P = principal = $425

R = rate = 5.5%

T = time = 3/12 = 1/4 = 0.25

S.I = PRT/100

= (425 × 5.5 × 0.25)/100

= $584.375/1000

= $5.84