Question

You have $65 in your savings account at the beginning of a month. The bank pays you

2.75% interest on this account each year; interest payments are made each month.
Assuming you make no deposits or withdrawals over the next month, how much
interest will you earn during the month?

Answer 1

$0.15

Step-by-step explanation:

Interest is calculated using the formula below.

I = P x i x t

where I = interest

P= principal amount.

i=interest rate

t=time

Interest is given as an annual percentage. A 2.75 % interest will translate to 2.75/100 divided by 12 monthly interest. Therefore, the applicable interest rate is 0.00229 %

interest for the month will be

i=$65 x 0.00229 x 1

=$0.14895

=$0.15