You receive an inheritance of 12,500, and you place the full amount into a bank account. The bank pays a simple interest rate of 7.5% per year. How much interest have you earned after one year? Give your answer in dollars and cents to the nearest cent

Solution

Y o u rece i v e an inh er i t an ce o f 12, 500, an d yo u pl a ce t h e f u ll am o u n t in t o a bank a cco u n t . T h e bank p a ys a s im pl e in t eres t r a t e o f 7.5% p er ye a r . Ho w m u c h in t eres t ha v e yo u e a r n e d a f t er o n e ye a r ? G i v e yo u r an s w er in d o ll a rs an d ce n t s t o t h e n e a res t ce n t

Interest : 937.5

Solution steps

Translate the problem into an equation:

I = 12500 \cdot 0.075 \cdot 1

Simplify

I = 12500 \cdot 0.075 \cdot 1

Interest : 937.5