For a simple interest account, the amount of money, A, in the account after t years is the principal (original amount invested) plus interest: A=P+Prt

Question

Here P represents the principal and r represents the annual interest rate.
 
A. Show that A= P(1+rt) is equivalent to A=P + Prt
B. The quantity (1+rt) is known as a growth factor.
     I: Suppose you invest $1250 for 5 years in a simple interest account that pays 4.1% (0.041) interest
          A: Evaluate A= P+Prt
          B: Evaluate A=P(1+rt)
          C: Discuss which calculation was simpler
 
II: If you need to determine P, which equation would use to solve for P? Explain

Answer 1

I.

A = 1250 + 1250 x .041 x 5

A = 1250 ( 1 + .041 x 5)

they are both very similar, but 2 is slightly easier

II.

A = P (1+rt) -> A/(1+rt) = P