You are creating an emergency fund and decide to place $415.00/month in an account that earns a 3.75% APR. How much interest accrues by the end of the first full month? Round to the nearest penny.

Answer 1

To calculate the interest accrued by the end of the first full month, we can use the formula for simple interest:

Interest = Principal x Rate x Time

In this case, the principal is the amount you deposit each month ($415.00), the annual interest rate (APR) is 3.75%, and the time is 1 month.

First, we need to calculate the monthly interest rate by dividing the annual interest rate by 12 (since there are 12 months in a year):

Monthly interest rate = 3.75% / 12 = 0.375% = 0.00375

Now we can calculate the interest accrued by the end of the first full month:

Interest = $415.00 x 0.00375 x 1 = $1.55625

Rounding to the nearest penny, the interest accrued would be $1.56 by the end of the first full month.