Question

On July 31st Eileen Anders deposited $550 in a saving account at Mat savings and loan association. at the end if December, her interest was computed at an annual rate of 4.3% . How much simple interest did her money earn?

Answer 1

The simple interest earned is $9.85

Here, we want to calculate the simple interest earned on the amount deposited

Mathematically, we can calculate simple interest using the equation;

$\begin{gathered} \text{simple interest = }\frac{P\text{ }\times\text{ R }\times\text{ T}}{100} \\ \\ \text{where P is the amount deposited called principal = \ 550} \\ R\text{ is the rate which is 4.3\%} \\ \\ T\text{ is the time which is the duration of time which is 5 months here; we shall represent this with }\frac{5}{12} \\ \\ \text{Substituting these values, we have;} \\ \\ \text{simple interest = }\frac{550\text{ }\times\text{ 4.3 }\times\frac{5}{12}}{100}\text{ = }\frac{11,825}{1200} \\ \\ \text{simple interest = 9.85} \end{gathered}$