Question

14. On March 1 Tessa Obee deposited her IRS refund check for $9,364.85 in a savings account at State Bank. The account pays 4 percent interest calculated on a daily basis. Five days later on March 6 she withdrew $1,000.00. On March 18, 12 days later, she withdrew $2,000.00. On March 28, 10 days later, she withdrew another $2,000.00. Three days later on March 31 interest was computed. How much simple interest did her money earn?

Answer 1

Her money earned a simple interest of $24.55.

Explanation:

Since Tessa deposited $9364.85 and she gets 4% interest on daily basis, then before she withdraws $1000 after 5 days, she must've gotten an interest of:

9364.85 x 4% × (5/365) ≈ 5.13

After withdrawing $1000, she has $8364.85. If this remains in the account for 12days, as we have in the question, then the interest on that will be:

8364.85 x 4% × (12/365) ≈ 11.00

After withdrawing $2000, she has $6364.85. If this remains for 10days, her interest would be:

6364.85 x 4% × (10/365) ≈ 6.98

After withdrawing $2000, she has $4364.85. If this remains for 3days, her interest would be:

4364.85 x 4% × (3/365) ≈ 1.44.

In totality, her interest would be: 5.13 + 11.00 + 6.98 + 1.44 = 24.55.

Hence, her money earned a simple interest of $24.55.