An account earns simple interest. $1500 at 4% for 5 years a. Find the interest earned. $ b. Find the balance of the account.

Answer 1

Simple interest , I, is calculated by multiplying the principal, P, by the rate,r, by the time, t, in years:

I = P * r * t

Here, P = $1500

r = 0.04 (decimal value for 4%)

t = 5 years

Part a)

The interest earned will be:

I = P * r * t

I = 1500 * 0.04 * 5

I = $300

Part b)

The balance in the account will be $1500 plus the interest earned or:

$1500 + 300 = $1800