Question

Find the accumulated amount at the end of 5 months on a $150 bank deposit paying simple interest at a rate of 6% per year.

a. $156.75
b. $151.75
c. $153.75
d. $157.75
e. $155.75
f. None of the above.

Answer 1

Answer:

c. $153.75

Explanation:

The computation of the accumulated amount at the end of 5 months is shown below:

The interest on $150 at 6% for 5 months is

= $150 × 6% × 5 months ÷ 12 months

= $3.75

Now the accumulated amount at the end of 5 months is

= Bank deposit + interest

= $150 + $3.75

= $153.75

Hence, the correct option is c. $153.75