A $52,400 investment shows annual earnings of 8.5%. To the nearest dollar, what is the monthly income on the investment?

Rationale

The monthly income on the investment is $371.

To find the monthly income from a $52,400 investment with an annual return of 8.5%, we first calculate the annual income and then divide by 12. The annual income is $52,400 multiplied by 0.085, which equals $4,454. The monthly income is then $4,454 divided by 12, resulting in approximately $371.

A ($356) YOUR ANSWER

This choice represents an underestimation of the monthly income. If we calculate it from the annual income of $4,454, this choice does not align with the correct division of the total yearly earnings by 12 months, resulting in an incorrect monthly figure.

B ($371) CORRECT

This is the correct choice, as it accurately reflects the monthly income obtained from dividing the annual income of $4,454 by 12, yielding approximately $371.

C ($409) YOUR ANSWER

This option is an overestimation of the monthly income. If we assume $409 as the monthly income and multiply by 12, the estimated annual income would be $4,908, which exceeds the actual annual income of $4,454, indicating a miscalculation.

D ($449) YOUR ANSWER

This choice significantly overestimates the monthly income. Calculating with $449 as the monthly income would suggest an annual income of $5,388, which again is much higher than the actual income from the investment, indicating a serious miscalculation.

Conclusion

To determine the monthly income from an investment, it is essential to accurately calculate the annual income and divide it by 12. In this case, the correct monthly income of $371 arises from the correct application of the formula based on the investment's annual return. The other options fail to reflect the correct calculations, either by underestimating or overestimating the potential earnings.

A $52,400 investment shows annual earnings of 8.5%. To the nearest dollar, what is the monthly income on the investment?

The monthly income on the investment is $371.

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