Question

Jerome's average balance checking account pays simple interest of 7. 2% annually, and he made $5. 28 in interest last month. What was Jerome's average balance last month?.

Answer 1

Simple interest is the amount charged on the principal amount with a fixed rate of interest for a time period.

The balance of the last month of Jerome's account is $880

What is simple interest?

Simple interest is the amount charged on the principal amount with a fixed rate of interest for a time period. Simple interest calculated only on the principal amount.

The formula for the simple interest can be given as,

$I=\dfrac{P\times r\times t}{100}$

Here, $I$ is the interest rate on the principal amount of $P$ with the rate of $r$ in the time period of $t$.

Given information-

Jerome's average balance checking account pays simple interest of 7.2% annually.

Jerome made $5.28 in interest last month.

Convert the interest rate monthly as,

$r=\dfrac{7.2}{12} \\r=0.6$

Thus the monthly interest rate is 0.6 percent.

Suppose the balance of the last month is $P$. Use the above formula to find the principal amount,

$I=\dfrac{P\times r\times t}{100}\\5.28=\dfrac{P\times 0.6\times 1}{100}$

Solve it for $P$,

$P=\dfrac{5.28\times100}{0.6\times1} \\P=\dfrac{528}{0.6} \\P=880$

Hence, The balance of the last month of Jerome's account is $880.

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