Simple Interest #1

Question

Calculate the amount of money you will have in the following account after 10 years, assuming that you earn simple interest.

You deposit $875 into an account with an annual interest rate of 3.25%.

 (Round to the nearest cent.)

Answer 1

Jesse,

Once you know it's simple interest, you can refer to the simple interest formula (I=Prt, where I is total interest, P is original amount, r is rate and t is time). 

 

Then it's a matter of substituion:

I=Prt

I=(875)(.0325)(10)

I=284.375

 

However, this does NOT tell you how much is in the account. This formula simply produces the amount of interest that will be added into the account. Therefore, your final answer would be $875+$284.375 then rounded to the nearest tenth...

 

$1159.38