Exercise 7 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 $650 in a savings account with an annual interest rate of 5 %. We want to calculate the time it will take to reach $178.25 simple interest. Keep in mind that 5 % is written in decimal form as 0.05. P= 650, r= 0.05, I= 178.25 To calculate the interest, we will substitute these values into the simple interest formula and solve the resulting equation for t.

I=Prt

SubstituteValues

Substitute values

178.25=( 650)( 0.05)( t)

DivEqn

.LHS /(650)(0.05).=.RHS /(650)(0.05).

178.25/(650)(0.05)=(650)(0.05)( t)/(650)(0.05)

CancelCommonFac

Cancel out common factors

178.25/(650)(0.05)=(650)(0.05)( t)/(650)(0.05)

SimpQuot

Simplify quotient

178.25/(650)(0.05)= t

Multiply

Multiply

178.25/32.5= t

CalcQuot

Calculate quotient

5.484615...= t

RearrangeEqn

Rearrange equation

t=5.484615...

RoundDec

Round to 2 decimal place(s)

t≈ 5.48

We found that the interest reaches $178.25 in about 5.48 years.