The annual interest paid will be
1.25% of $550 = 0.0125 x $550 = $6.875 EVERY YEAR !
If the bank is only paying simple interest, and Samuel decides to
leave his money with them for 3 years (I don't know why), then
in return for letting them use his money, the bank will pay him
$6.875 at the end of the first year, another $6.875 at the end of
the second year, and another whole $6.875 (woo hoo !) at the
end of the third year.
Stuffing these numbers into the nearest available Cray, we
learn that when they're summed up, the bank's payments
will be
($6.875 + $6.875 + $6.875) = $20.625
So, after giving the bank the use of his money for 3 years,
Samuel will have a total of
($550 + $20.625) = $570.625
in his account. He can visit the bank at any time during normal
banker's hours (10 AM - 3 PM Mon-Thu) and claim his money.
When he does that, he should remember to demand that the
half-cent must remain in his account and continue to accrue
interest. If he does that, and if the bank continues to pay
simple interest at the same rate, then that half-cent will
grow to be a whole cent in only 80 more years. Samuel
should include it in his will and bequeath it to his estate,
on the off-chance that something unfortunate and unplanned
could happen to him during the next 80 years.
