Exercise 1 Page 266

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& = Interest P& = Principal r& = Annual interest rate t& = 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 912 of a year and that 3 % is written in decimal form as 0.03. P= 500, r= 0.03, t= 9/12 To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.

I=Prt

SubstituteValues

Substitute values

I= 500( 0.03)( 9/12)

Multiply

Multiply

I=15(9/12)

MoveLeftFacToNumOne

a* 1/b= a/b

I=15* 9/12

Multiply

Multiply

I=135/12

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.