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.
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.