Exercise 6 Page 267

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 $800 in a savings account with we earn $360 simple interest in 3 years. We want to calculate the annual rate. P= 800, I= 360, t= 3 To calculate the interest, we will substitute these values into the simple interest formula and solve the resulting equation for r.

I=Prt

SubstituteValues

Substitute values

360=( 800)( r)( 3)

DivEqn

.LHS /(800)(3).=.RHS /(800)(3).

360/(800)(3)=(800)( r)(3)/(800)(3)

CancelCommonFac

Cancel out common factors

360/(800)(3)=(800)( r)(3)/(800)(3)

SimpQuot

Simplify quotient

360/(800)(3)= r

Multiply

Multiply

360/2400= r

CalcQuot

Calculate quotient

0.15= r

RearrangeEqn

Rearrange equation

r=0.15

Since the decimal number 0.15 is equal to 15%, the annual interest rate is 15%.