Use 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.
B
The new balance of the account is the sum of the old balance and the accrued interest.
A
$ 105
B
$ 455
Practice makes perfect
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 $350 in a savings account with an annual interest rate of 3 %. We want to calculate the balance after 10 years. Keep in mind that 3 % is written in decimal form as 0.03.
P= 350, r= 0.03, t= 10
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 after 10 years is $105. The new balance of the account is the sum of the old balance and the accrued interest.
$ 350+ $ 105=$ 455
The balance of the account after 10 years is $ 455.
