Question

Frank deposits 5350.00 in a savings account. The account pays an annual Interest rate of 1%. Ile makes no other deposits or withdrawals. After 3 months, the interest is calculated. How much simple interest did his money earn? A) $1.17 B) $3.60 C) $6.50 D) $14.00​

Answer 1

Answer:

If the account paid a monthly interest instead of annual, the answer would be $162.12

Step-by-step explanation:

PS: THIS ISN'T THE ANSWER TO THIS QUESTION BECAUSE IT STATED 'ANNUAL INTEREST' BUT I USED MONTHLY INTEREST INSTEAD. HOPE THIS HELPS SOMEONE ELSE THOUGH.

FIRST MONTH

Original value is $5350.00

Percentage increase(interest gained) is 1%

Total value after 1st month is equal to the Original Value + The interest

$5350.00 x 0.01 (0.01 = 1/100 = 1%) = $53.50

Do not try and do this altogether as you will get the answer wrong. Instead calculate month by month.

At the end of the first month, he has ($5350.00 + $53.50) = $5403.50

SECOND MONTH

Original Value is $5403.50

Percentage increase(interest gained) is still 1%

Total value after the 2nd month is equal to the Original Value+The interest

$5403.50 x 0.01 = $54.035

ALWAYS round off to the nearest cent before continuing.

At the end of the second month, he has ($5403.50 + $54.04) = $5457.54

THIRD MONTH

Original Value is $5457.54

Percentage increase(interest gained) is 1%

Total value after the 3rd month is equal to the Original Value + The interest

$5457.54 x 0.01 = $54.5754 = $54.58

When rounding off, if the number is 5 or higher, add 1 to the digit before it.

At the end of the third month, he has ($5457.54 + $54.58) = $5512.12

The question asks, how much interest did his money earn. If you calculated like how I did above, picking the interest should be easy.

Simply add, the first month's interest, to the second month's interest, to the third month's interest.

$53.50 + $54.04 + $54.58 =  $162.12