Question

Ignacio earns 5 percent simple interest annually on his savings account. How much interest will he earn each month on $1250?

simple interest = P × r × t
$5.21
$52.10
$62.50

Answer 1

"5 percent simple interest *annually*"

COMBINED WITH

"How much interest will he earn *each month*"

you should de-compound the 5%, but that is usually over and above.

thus, 5% annual is \(\frac{5}{12}\)% per month. and \(\frac{0.05}{12}* USD \ 1250 = USD\ 5.208 \dot{3}\)