You deposit $150 in a savings account that earns simple interest at a rate of 5.5% per year. How much interest will you have earned after 9 months?

Answer 1

If I = interest rate = 5.5% per year

t = time in years = 9/12

Po = starting principal = $150

P = = total money earned

Then, P = P_o(1 + I)^t or P = 150(1.055)^(9/12) = $156.15

or You will earn $6.15 after 9 months

If you use the simple interest formula Interest = Principal x Rate x Time

you get Interest = (150)(.055)(9/12) = $6.19