You have to maintain a minimum balance of $750 in your savings account. The interest rate earned your savings is 3.75% per year, compounded monthly. What is the least amount of interest you earn over a two year period?
To calculate the least amount of interest earned over a two-year period, we first need to determine the interest earned each month and then multiply it by the number of months in two years.
The interest rate is 3.75% per year, compounded monthly. To calculate the monthly interest rate, we divide the annual interest rate by 12 months.
Monthly interest rate = (3.75% / 100) / 12 = 0.0375 / 12 = 0.003125
To calculate the interest earned each month, we multiply the current balance by the monthly interest rate.
Interest earned each month = Current balance * Monthly interest rate
Since the minimum balance required is $750, the interest earned each month would be:
Interest earned each month = $750 * 0.003125 = $2.34375
Over a two-year period, there are 12 months in each year, so the total number of months is 12 * 2 = 24.
To calculate the least amount of interest earned over two years, we multiply the interest earned each month by the total number of months.
Least amount of interest earned over two years = Interest earned each month * Total number of months
Least amount of interest earned over two years = $2.34375 * 24 = $56.25
Therefore, the least amount of interest earned over a two-year period would be $56.25.