if ellie deposits $500 a month, how much interest can she make in one year with an interest rate of 2%…

Explanation:

Step1: Calculate the total principal

She deposits $500 per - month for 12 months. So the total principal $P = 500\times12=6000$.

Step2: Use the simple - interest formula

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. Here, $r = 0.02$ and $t = 1$. $I=Prt=6000\times0.02\times1 = 120$.

However, if we assume this is a monthly - compounded interest problem: The monthly interest rate $i=\frac{r}{12}=\frac{0.02}{12}$. We use the future - value of an ordinary annuity formula $F = A\times\frac{(1 + i)^{n}-1}{i}$, where $A = 500$, $i=\frac{0.02}{12}$, and $n = 12$. $F=500\times\frac{(1+\frac{0.02}{12})^{12}-1}{\frac{0.02}{12}}$ First, calculate $(1+\frac{0.02}{12})^{12}\approx1.020184$. Then $F = 500\times\frac{1.020184 - 1}{\frac{0.02}{12}}=500\times\frac{0.020184}{\frac{0.02}{12}}=500\times\frac{0.020184\times12}{0.02}=500\times12.1104 = 6055.31$. The interest $I=F - P=6055.31-6000 = 55.31$.

Answer:

$55.31$