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?

• A. 40 dollars
• B. 10 dollars
• C. 50 dollars
• D. 20 dollars

Answer 1

The correct option is B 10 dollars

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

$Simpleinterestformula:$


The principal is 500 dollars.

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

= 0.04

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

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

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