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Question

Difficulty: EasySimple Interest Applications

Maria purchases a $1,200\$1,200 government bond that earns an annual simple interest rate of 4%4\%. How much total interest will the bond earn after exactly 66 months?

  1. $24\$24Answer
  2. B
    $48\$48
  3. C
    $240\$240
  4. D
    $288\$288

Answer

$24\$24
The correct answer is found by taking the principal ($1,200\$1,200), multiplying it by the annual interest rate (0.040.04), and then multiplying by the time in years (0.50.5). This results in $1,200×0.04×0.5=$24\$1,200 \times 0.04 \times 0.5 = \$24.

Step-by-Step Solution

1
Identify the given values for principal, rate, and time.
Principal (P) = $1,200. Rate (R) = 4% or 0.04. Time (T) = 6 months.
These are the necessary components for the simple interest formula.
2
Convert the time period from months into years.
6 months ÷ 12 months/year = 0.5 years.
The annual interest rate requires the time to be expressed in years.
3
Calculate the interest using the formula I = PRT.
I = 1200 × 0.04 × 0.5 = 48 × 0.5 = 24.
This yields the total interest earned over the given time period.

Key Concept

Calculating simple interest over a fractional year
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Topics

Simple Interest Applications

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