Solve the problem. Assume that simple interest is being calculated in each case. Round your answer to the nearest cent.
-John Lee's savings account has a balance of $4466. After 15 months, what will the amount of interest be at 2.8% per year?
A) $140.05
B) $125.05
C) $156.31
D) $297.73

Question

Quizplus · Accepted Answer

We can use the simple interest formula:

I = Prt

Where I is the interest, P is the principal (starting amount), r is the interest rate per year (as a decimal), and t is the time in years.

First, we need to convert the time to years. Since there are 12 months in a year, we have:

t = 15/12 = 1.25 years

Plugging in the values we have:

I = 4466(0.028)(1.25)
I ≈ 156.31

Rounding to the nearest cent:

I ≈ $156.31

Therefore, the best choice is C. First, we need to find the interest rate for 15 months since the given interest rate is per year.

Interest rate for 15 months = (2.8/12) x 15 = 3.5%

Next, we can use the formula:

Interest = Principal x Rate x Time

Interest = $4466 x 0.035 x (15/12) = $156.31

Therefore, the answer is C, $156.31.

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