Question

The beginning balance of Cooper's savings account for the month of September was $5700, and it remained this way for the first 11 days of the month. On September 12, Cooper made a withdrawal of $900, so his balance changed, and it remained the same for a total of 9 days. On September 20, Cooper made a deposit of $1100, so his balance changed again, and it remained the same for a total of 10 days to finish out the month. Cooper's savings account has an APR of 3.65%, calculates interest daily, and pays interest at the end of the month. Cooper wants to calculate the amount he earned in interest during the month of September.

Part I: What interest rate does Cooper's savings account pay per day?

Part II: How much did Cooper earn in interest during the first 11 days of September?

Answer 1

Answer:

Part I:  Daily interest rate:  0.01%

Part II:  Interest earned after 11 days: $6.27

Step-by-step explanation:

The first step to solving Part I is to take the APR, the annual percentage rate, and divide by the number of days in a year (365) to get the daily rate on Cooper's account:  0.0365/365 = 0.0001 x 100 = 0.01%.

In order to solve Part II to find how much interest Cooper would have earned after the first 11 days, we can use the equation: I=PRT, where I=PRT where I = the interest earned, P= the principal amount, and T=time.  In this case, for the first 11 days, Cooper has $5700 in his account at the daily rate of 0.01%:

I = (5700)(0.0001)(11) = $6.27

Answer 2

Part III: How much money did Cooper earn in interest during the next 9 days of September?

Part IV: How much did Cooper earn in interest during the last 10 days of September

Part V: How much did Cooper earn in interest during the month of September?