At the beginning of March, Ryan had $621 in his savings account. On 10 March he deposited $60. If the bank pays 8% per annum simple interest, credited monthly, and calculates interest on the minimum monthly balance, how much interest does Ryan earn for March (in $)?

Introduction / Context:
This question tests how “minimum monthly balance” interest works. When interest is calculated on the minimum balance for the whole month, deposits made during the month do not increase the interest base for that month if the balance before deposit is lower. Here, Ryan starts with $621 and later deposits $60, which raises the balance, but the minimum monthly balance remains $621. Monthly interest is computed as (annual rate/12) on that minimum balance.

Given Data / Assumptions:

• Opening balance on March 1 = $621
• Deposit on March 10 = $60 (balance increases after deposit)
• Annual interest rate = 8% per annum
• Interest is paid monthly
• Interest is calculated on the minimum balance during the month
• Assume simple monthly calculation: monthly rate = 8% / 12

Concept / Approach:
Minimum balance method means the interest base for March is the lowest balance that occurred in March. Since Ryan had $621 before depositing, the minimum balance is $621. Monthly interest = minimum_balance * (0.08/12).

Step-by-Step Solution:
Minimum balance in March = $621 (before the deposit) Monthly interest rate = 8% / 12 = 0.08 / 12 Interest for March = 621 * (0.08 / 12) = 621 * 0.006666... = 4.14 (rounded to 2 decimals)

Verification / Alternative check:
If the bank used average daily balance instead, the deposit would increase interest somewhat. But because the problem explicitly says “minimum monthly balance”, only the minimum value ($621) is used, making $4.14 the correct monthly interest amount at 8% per annum.

Why Other Options Are Wrong:
$2.14 and $3.14 are too low (would correspond to much smaller balances or rates). $5.14 is too high for $621 at 8%/12. $4.80 would match interest on $720 at 8%/12, which is not the minimum balance.

Common Pitfalls:
Using the post-deposit balance ($681) instead of the minimum balance, applying 8% directly (forgetting monthly division by 12), or incorrectly prorating by days even though the method is minimum monthly balance.

Final Answer:
Ryan earns $4.14 interest for March.