Question

A woman puts $1 million dollars into a savings account that she is not going to touch. She isn’t going to work either but she will live off the interest. If the rate of interest on the account is 6 1/2% what is the amount she will make in interest? If her totally expenses last year is $47,000 will she be able to live off the interest? Justify your answer

Answer 1

i. The amount made in interest is $65,000.

ii. Yes, because her expenses is lesser that her interest.

Explanation:

i. The woman puts $1,000,000 in a savings account with an interest rate of 6
`(1)/(2)`%.

Interest rate = 6
`(1)/(2)`% =
`(13)/(200)`

The amount she would make in interest =
`(13)/(200)` × 1,000,000

= 65,000

The amount made in interest is $65,000.

ii. The total of her expenses last year is $47,0000 which is lesser than the amount made in inerest.

After her total expenses, should would have a remainder of;

= $65,000 - $47,0000

= $18,000

Therefore, she would be able to live off the interest.