Question

Grace invests $6600 in a money market account at a rate of 4% for 5 months. How much money will she receive in interest if the interest is calculated using the simple interest formula? Round your answer to the nearest penny if necessary. Use the formula I = Prt Hint: 4% must be written in decimal form and time must be expressed in years.

Answer 1

Keeping in mind that 5 months is not even a year, since there are 12 months in a year, then is really just 5/12 of a year, therefore

$\bf ~~~~~~ \textit{Simple Interest Earned Amount}\\\\ A=P(1+rt)\qquad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\to& \ 6600\\ r=rate\to 4\%\to \frac{4}{100}\to &0.04\\ t=years\to &\frac{5}{12} \end{cases} \\\\\\ A=6600\left( 1+0.04\cdot \frac{5}{12} \right)\implies A=6600\left( 1+\frac{1}{60} \right)\\\\\\ A=6600\left( \frac{61}{60} \right)$