Exercise 20 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 $1000 in a savings account with an annual interest rate of 9 %. We want to calculate the time it will take to reach $720 simple interest. Keep in mind that 9 % is written in decimal form as 0.09. P= 1000, r= 0.09, I= 720 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

720=( 1000)( 0.09)( t)

DivEqn

.LHS /(1000)(0.09).=.RHS /(1000)(0.09).

720/(1000)(0.09)=(1000)(0.09)( t)/(1000)(0.09)

CancelCommonFac

Cancel out common factors

720/(1000)(0.09)=(1000)(0.09)( t)/(1000)(0.09)

SimpQuot

Simplify quotient

720/(1000)(0.09)= t

Multiply

Multiply

720/90= t

CalcQuot

Calculate quotient

8= t

RearrangeEqn

Rearrange equation

t=8

We found that the interest reaches $720 in 8 years.