Question

The beginning balance of Zerina's savings account for the month of July was $1800 and it remained this way for the first 12 days of the month. On July 13, Zerina made a withdrawal of $400, so her balance changed, and it remained the same for a total of 8 days. On July 21, Zerina made a deposit of $1200, so her balance changed again, and it remained the same for 11 days to finish out the month. If Zerina's savings account has an APR of 7.3%, calculates interest daily, and pays interest at the end of the month, how much did Zernia earn in interest in the month of July?

Answer 1

(1800-400+1200)×7.3 in interest
^
2600×7.3
^
$18,980 total.

Answer 2

Interest income in the month = $12.28

Final balance = 2612.28

Explanation:

The initial amount of $1800 remains in the account for the first 12 days of July. Then:

Interest earned =
`(1800 * 0.073 * 12)/(365) = 4.32`

Withdrawal = 400

New balance = 1800 - 400 = 1400

The amount 1400 remains in the account for 8 days. Then:

Interest Earned =
`(1400 * 0.073 * 8)/(365) = 2.24`

Deposit = 1200

New balance = 1400 + 1200 = 2600

The amount 2600 remains in the account for 11 days. Then:

Interest Earned =
`(2600 * 0.073 * 11)/(365) = 5.72`

Balance = 2600 + 4.32 + 2.24 + 5.72 = 2612.28

Interest income in the month = 4.32 + 2.24 + 5.72 = $12.28