Answer:
If the account paid a <u>monthly</u> interest instead of <u>annual</u>, the answer would be $162.12
Step-by-step explanation:
<h3>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.</h3><h3><u>FIRST MONTH</u></h3>
Original value is $5350.00
Percentage increase(interest gained) is 1%
Total value after 1st month is equal to the Original Value + The interest
<em>$5350.00 x 0.01 </em>(0.01 = 1/100 = 1%) =<em> $53.50</em>
Do not try and do this altogether as you will get the answer wrong. Instead calculate month by month.
At the end of the <u>first month</u>, he has <em>($5350.00 + $53.50) = $5403.50</em>
<h3><u>SECOND MONTH</u></h3>
Original Value is $5403.50
Percentage increase(interest gained) is <em>still </em>1%
Total value after the 2nd month is equal to the Original Value+The interest
<em>$5403.50 x 0.01 = $54.035</em>
<u>ALWAYS</u> round off to the nearest cent before continuing.
At the end of the <u>second month</u>, he has <em>($5403.50 + $54.04) = $5457.54</em>
<h3>
<u>THIRD MONTH</u></h3>
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
<em>$5457.54 x 0.01 = $54.5754 = $54.58</em>
When rounding off, if the number is 5 or higher, add 1 to the digit before it.
At the end of the <u>third month</u>, he has <em>($5457.54 + $54.58) = $5512.12</em>
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.
<em>$53.50 + $54.04 + $54.58 = $162.12</em>
