Question

Regina's average balance checking account pays simple interest of 3.6% annually, and she made $2.31 in interest last month. What was Regina's average balance last month?
A. $770.00
B. $77.00
C. $7.70
D. $7700.00

Answer 1

Answer:

A. $770.00

Step-by-step explanation:

We have been given that Regina's average balance checking account pays simple interest of 3.6% annually, and she made $2.31 in interest last month.

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

$I=Prt$, where,

$I=\text{Amount of interest}$,

$P=\text{Principal amount}$,

$r=\text{Annual interest rate in decimal form}$,

$t=\text{Time}$

Let us convert our given interest rate in decimal form.

$3.6\%=\frac{3.6}{100}=0.036$

Now we will divide 0.036 by 12 to find the monthly interest rate.

$\frac{0.036}{12}=0.003$

$\ 2.31=P*0.003*1$

$\ 2.31=P*0.003$

$\frac{\ 2.31}{0.003}=P$

$P=\ 770.00$

Therefore, option A is the correct choice.

Answer 2

3.6%/12=0.3% monthly
Balance last month
2.31/0.003=770