Question

Find the interest earned in three months if you deposit $500 in a savings

account with an interest rate of 4% annually. Show your work.

Answer 1

$5

Explanation:

First, converting R percent to r a decimal

r = R/100 = 4%/100 = 0.04 per year,

putting time into years for simplicity,

3 months ÷ 12 months/year = 0.25 years,

then, solving our equation

I = 500 × 0.04 × 0.25 = 5

I = $ 5.00

The simple interest accumulated

on a principal of $ 500.00

at a rate of 4% per year

for 0.25 years (3 months) is $ 5.00.