Question

A bank pays simple interest at the rate of 5% per annum on all deposits. Interest is credited to the account quarterly on March 31st, June 30th , September 30th and December 31st, based on the minimum quarterly balance for that period. If a person opens an account with a deposit of $ 40,000 on January 1st. They then make a withdrawal of $ 3,000 on 10th June. If there were no further transactions (deposits or withdrawals), how much interest will be credited to the account on December 31st. ​

Answer 1

Balance Jan 1 = $40000
Interest Mar 31 = 40000 x 5% = $2000
Balance Mar 31 = 40000 + 2000 = $42000
Withdraw Jun 10 = $3000
New balance = $39000
Interest Jun 30 = 39000 x 5% = $1950
Balance Jun 30 = 39000 + 1950 = $40950
Interest Sep 30 = 40950 x 5% = $2047.50
Balance Sep 30 = 40950 + 2047.50 = $42997.50
Interest Dec 31 = 42997.50 x 5% = $2149.88 rounding up to nearest cent