Question

Your savings account pays 2.5% interest per year. How much interest does the account pay per month.a) .02%b) .04%c) .21%d) .43%

Answer 1

ANSWER

C) 0.21 %

EXPLANATION

We have that the account pays 2.5% interest per year.

A year consists of 12 months.

So to find the monthly interest, we have to divide it by 12.

That is:

$\begin{gathered} \frac{2.5}{12}\text{ \%} \\ =\text{ 0.2083 }\cong0.21\text{ \%} \end{gathered}$

The monthly rate is 0.21%