Exercise 15 Page 269

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 $400 in a savings account with we earn $24 simple interest in 2 years. We want to calculate the annual rate. P= 400, I= 24, t= 2 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

24=( 400)( r)( 2)

DivEqn

.LHS /(400)(2).=.RHS /(400)(2).

24/(400)(2)=(400)( r)(2)/(400)(2)

CancelCommonFac

Cancel out common factors

24/(400)(2)=(400)( r)(2)/(400)(2)

SimpQuot

Simplify quotient

24/(400)(2)= r

Multiply

Multiply

24/800= r

CalcQuot

Calculate quotient

0.03= r

RearrangeEqn

Rearrange equation

r=0.03

Since the decimal number 0.03 is equal to 3%, the annual interest rate is 3%.