To solve this question, we'll apply the simple interest formula. Simple interest is calculated using the following formula:
Interest (I) = Principal (P) Rate (R) Time (T)
where:
- P is the principal amount (the initial amount of money)
- R is the annual interest rate (in decimal form)
- T is the time the money is invested or borrowed for, in years
Let's use the information provided:
- The principal amount (P) that Allison has in her savings account is [tex]$1,250.
- The annual interest rate (R) is 2.2%. To use it in the formula, we need to convert the percentage into a decimal. This is done by dividing by 100: 2.2% / 100 = 0.022.
- The time (T) is six months. Since the interest rate is given on an annual basis, we need to convert the time into years. Six months is half a year, so T = 0.5 years.
Using this information, let's plug the values into the formula:
I = P R T
I = $[/tex]1,250 0.022 0.5
Now let's calculate the interest:
I = [tex]$1,250 * 0.011
I = $[/tex]13.75
So the interest Allison's account will earn in six months is $13.75.
