Web Analytics
Answered

Yvonne put $4,000 in a savings account. At the end of 3 years, the account had earned $960 in simple interest.


a.How much does she have in her account at the end of 3 years?

b.At what annual simple interest rate did the account grow?

c.How many more dollars would she have in her account if the interest rate were 1% greater?


For each question, show your steps and explain your work.

Verified Answer :

I = Prn

 
I = interest  P = principal... amount invested

r = interest rate as a decimal

n = time periods

 
a. Interest + principal = amount in the account

    $4,000 + $960 = $4,960
 
b. 960 = 4000 x r x 3

    960 = 12000 x r

    solve for r then multiply by 100 to get a percentage

    \(r= \frac{960}{12000} = \frac{96}{1200} = \frac{8}{100} =0.08 \times 100\%=8\%\)
 
c. find \(I=4000\times (r+1\%)\times 3\)
    \(I=4000\times (0.08+ \frac{1}{100}) \times 3=4000\times 0.09\times 3=1,080\)
    $1,080 - $960 = $120 

Related Questions