Question

Nick Bolger kept $1,200 on deposit for six months in a three-month money market account that pays simple interest. For the first 3 months, the account paid 2.5% annual interest. For the next 3 months, an annual interest rate of 2.15% was paid. What total interest did Nick earn for the six months?

Answer 1

Answer:

13.95

Explanation:

Given that :

Principal amount = 1200

Simple interest rate paid :

r = 2.5% ; period = first 3 months

r = 2.15% ; period = next 3 months

Simple interest (1st three months) :

Monthly rate = 2.5% / 12 = 0.0020833

2nd three month = 2.15% / 12 = 0.0017916

Interest = principal * rate * time

Interest (1st three months) = (principal * rate * time)

Interest = (1200 * 0.0020833 * 3)

= 7.49988

Interest = (2nd three months) = (principal * rate * time)

Interest = (1200 * 0.0017916 * 3)

= 13.12479 * 3)

= 6.44976

Total interest : ( 7.49988 + 6.44976)

= 13.94964

= 13.95