Franklin deposited $1,400 in a savings account that earns simple
interest at 6.75%. What is the balance in his account at the beginning
of the third quarter?
a. $78.75
b. $1,447.25
c. $1,505
d. $105
The third quarter begins on July 1st, which is halfway through the year. Therefore, there will be 6 months of interest earned on the account.
To calculate the interest earned, we can use the simple interest formula:
Interest = Principal x Rate x Time
In this case, the principal is $1,400, the rate is 6.75%, and the time is 6 months (or 0.5 years):
Interest = 1400 x 0.0675 x 0.5 = $47.25
So, the balance in the account at the beginning of the third quarter is:
Balance = Principal + Interest = $1,400 + $47.25 = $1,447.25
Therefore, the answer is (b) $1,447.25.