Simonhas$14,784inasavingsaccountthatearns2%interestperyear.Theinterestisnotcompounded.Tothenearestcent,howmuchinterestwillheearnin4months?
Question
Simon has $14,784 in a savings account that earns 2% interest per year. The interest is not compounded. To the nearest cent, how much interest will he earn in 4 months?
Solution
To calculate the interest Simon will earn in 4 months, follow these steps:
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First, find out how much interest Simon earns in a year. Since the interest rate is 2%, you can calculate this by multiplying his total savings by the interest rate: 295.68. This is the amount of interest Simon earns in one year.
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Since the interest is not compounded, it means that Simon earns the same amount of interest every month. To find out how much interest he earns in a month, divide the yearly interest by 12 (the number of months in a year): 24.64. This is the amount of interest Simon earns in one month.
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Finally, to find out how much interest Simon earns in 4 months, multiply the monthly interest by 4: 98.56.
So, to the nearest cent, Simon will earn $98.56 in interest in 4 months.
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