Question

A woman deposits $600 in a savings account that pays 5% annually. If she withdraws all the money in the account after 120 days, how much does she withdraw (rounded to the nearest dollar)? She withdraws $ after 120 days.

Answer 1

There is no mention of compounding of interest. Hence we will assume that it is a case of simple interest.

Simple interest on $ 600 for 120 days at 5 % is $ 600*120/360*5/100 = $ 10. Thus, the amount that the woman can withdraw after 120 days is $ 600 +$10 = $ 610.

Note:

In US, a banking year is considered to be of 360 days. If we consider it to be of 365 days, then the interest is $ 600*120/365*5/100 = $ 9.86 0r $ 10, on rounding off to the nearest dollar. Thus, the amount that can be withdrawn remains $ 610.