If we borrow money from a bank, we pay the bank interest for the use of their money. Similarly, if we open a savings account, the bank deposits extra money on this account as interest. To calculate the interest

I,

we use the simple interest formula.

I = P r t, where ... I P r t = Interest = Principal = Annual interest rate = Time (in years)

We know that we deposit

$ 500

in a savings account with an annual interest rate of

3 % .

We want to calculate the balance after

9

months. Keep in mind that nine month represents

\frac{9}{1 2}

of a year and that

3 %

is written in decimal form as

0.03 .

P = 500, r = 0.03, t = \frac{9}{1 2}

To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.

I = P r t

SubstituteValues

Substitute values

I = 500 (0.03) (\frac{9}{1 2})

Multiply

I = 15 (\frac{9}{1 2})

MoveLeftFacToNumOne

$a \cdot \frac{1}{b} = \frac{a}{b}$

I = \frac{1 5 \cdot 9}{1 2}

Multiply

I = \frac{1 3 5}{1 2}

CalcQuot

Calculate quotient

I = 11.25

After

9

month, the interest accrued is

$ 11.25 .

The new balance of the account is the sum of the old balance and the accrued interest.

$ 500 + $ 11.25 = $ 511.25

The balance of the account after

9

moths is

$ 511.25 .

Exercise