You are creating an emergency fund and decide to place $415/month in an account that earns a 3.75%APR. How much interest accrues by the end of the first full month?

I don't know if I did it right, but the answer I got was.....

$129.69

Anyone know if that is right?

Question

You are creating an emergency fund and decide to place $415/month in an account that earns a 3.75%APR. How much interest accrues by the end of the first full month?

I don't know if I did it right, but the answer I got was.....

$129.69

Anyone know if that is right?

anonymous · Answer

I don't think I did it right!

unklerhaukus · Answer

what does APR stand for?

anonymous · Answer

Annual Percentage Rate?
I think.

jim_thompson5910 · Answer

They want the interest, not the full amount in the account

anonymous · Answer

I understand that. 
I guess I just don't understand how to get the interest amount.

Can you explain the process of it? You don't have to give the answer, but can you explain the steps?

anonymous · Answer

@jim_thompson5910

jim_thompson5910 · Answer

Use the formula

I = Prt

jim_thompson5910 · Answer

P = 415
r = 0.0375
t = 1/12 (since t is in years)

anonymous · Answer

Okay, so it would be....

$1.30?

anonymous · Answer

Yep.

anonymous · Answer

You had to divide the 3.75% p.a by 12, to find the interest rate per month.

anonymous · Answer

Okay, I have another one to do, so i'm going to do it real quick, and can you check it for me?! (:

jim_thompson5910 · Answer

sure

anonymous · Answer

Got to go mate. This was the last answer I was going to give. @jim_thompson5910  may continue to help you if he's not busy. Have fun mate.

anonymous · Answer

You consistently deposit $250.00 into a savings account on the 15th of each month, and the account earns a 2.5% APR. How much is the balance of your savings account at the end of the 3rd month?

Okay, so I got the interest total to be.. $1.56

Now do I add that to the $250.00?

anonymous · Answer

@jim_thompson5910

anonymous · Answer

Wait, I would do 250*3 to get all three months right?

jim_thompson5910 · Answer

one sec

anonymous · Answer

I got 751.56 as the answer.

jim_thompson5910 · Answer

this sounds like an annuity problem

jim_thompson5910 · Answer

have you heard of that term?

anonymous · Answer

Yes, I have.

jim_thompson5910 · Answer

just trying to figure out if it's an ordinary annuity or an annuity due

anonymous · Answer

No idea.

jim_thompson5910 · Answer

well let's assume it's an ordinary annuity

jim_thompson5910 · Answer

So you would use this formula

FV = C [ ( (1+i)^n - 1)/i ]

where in this case

C = 250
i = 0.025/12 = 0.00208
n = 3

anonymous · Answer

I don't even know how to begin to use that formula.

jim_thompson5910 · Answer

just plug in the given values and use a calculator to evaluate