Question

Josephine puts 500 dollars in a savings account. The account earns 4% interest per year. How much interest will she get at the end of 6 months?

Answer 1

Simple interest is the money earned on a savings account or an investment.

\(Simple~ interest ~formula:\)


The principal is 500 dollars.

$\text{Annual interest rate} = 4\% = \dfrac{4}{100}$

= 0.04

$\text{Time = 6 months} =\dfrac{1}{2}\ \ \text{year}$

∴ The interest amount
$= 500 \times 0.04 \times\dfrac{1}{2} = 10\ \text{dollars}$

Hence, she will earn 10 dollars as interest at the end of 6 months.