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In January, Mrs. Smith put $10,000 into
an account that earned 3.18% simple
interest per year. Eleven months later,
she withdrew the interest only from the
account for purchasing gifts. How much
money did she have to buy gifts?

Respuesta :

The amount of money she would have is $10,291.50.

The amount of money she would have to buy the gift is the sum of the amount deposited and the interest.

Simple interest is interest that only accrues on the amount of money deposited into the account.

The formula that can be used to determine simple interest is: principal x time x interest rate

Where:

  • Principal = amount deposited = $10,000
  • Time = 11/12
  • Interest rate = 3.18%

$10,000 x 11/12 x 0.0318 = $291.50

$10,000 + $291.50 = $10,291.50

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