Question

You save 3 ,260.00 in a savings account earning a 3.55% APR compounded monthly. How much is the total interest earned by the end of the third month?

Answer 1

Answer:

$29.02.

Step-by-step explanation:

We have been given that you save 3 ,260.00 in a savings account earning a 3.55% APR compounded monthly. We are asked to find the total interest earned by the end of the third month.

We will use compound interest formula to solve our given problem.

$A=P(1+\frac{r}{n})^{nt}$, where,

A = Amount of interest after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of periods interest is compounded per year,

t = Time in years.

$3.55\%=\frac{3.55}{100}=0.0355$

$\text{3 months}=\frac{3}{12}\text{ year}=\frac{1}{4}\text{ year}$

Upon substituting our given values in above formula, we will get:

$A=3,260(1+\frac{0.0355}{12})^{12\times \frac{1}{4}}$

$A=3,260(1+0.002958333)^{3}$

$A=3,260(1.002958333)^{3}$

$A=3,260*1.00890128109888$

$A=3289.0181763823\approx 3289.02$

Now, we will subtract principal amount from final amount to find amount of interest.

$\text{Amount of interest}=3289.02-3260$

$\text{Amount of interest}=29.02$

Therefore, you will earn am amount of $29.02 by the end of the third month.

Answer 2

The answer will be $29.02. :)