Question

Andre put $2500 into an 18 month money market account. The interest rate is 13.25% simple interest. How much money will Andre have in the account at the end of the 18 months?

Answer 1

Simple interest gives us how much return our money gets after a period. There are certain data we need to properly calculate it.

The money invested is the Principal, P

The rate of return is R

The period for which it is invested is T

SIMPLE INTEREST FORMULA

$I=\text{PRT}$

In our case, we have:

P =$2500

R = 13.25% = 0.1325

T = 18 months = 1 year, 6 months = 1.5 years

$I=2500\times13.25\text{ \%}\times\frac{18}{12}=2500\times0.1325\times1.5=496.875$

Simple Interest = $496.875

Total amount after 18 months = $2,996.875