AUse the simple interest formula I=prt, where I is the interest, p the principal, r the annual interest rate, and t the time in years.
BTo find the balance of the account, add the interest found in Part A to the principal.
A$ 280
B$ 2280
Practice makes perfect
If we deposit money in a savings account, the bank pays us interest for the use of our money. To calculate the interest I, we use the simple interest formula.
I= p r t, where...
I& =Interest
p& = Principal
r& = Annual interest rate
t& = Time (in years)We made a deposit of $2000 in a savings account with an interest rate of 3.5 % = 0.035. We want to calculate the interest — how much we will earn in 4 years.
p= 2000, r= 0.035, t= 4
To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.
In Part A we found that the interest accrued in 4 years is $280. To find the balance of the account after this period of time, we add the interest to the principal — the amount of money deposited in the account.
$ 2000+ $ 280=$ 2280
The balance is $2280 after 4 years.
