Exercise 21 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 $800 in a savings account with an annual interest rate of 4.5 %. We want to calculate the time it will take to reach $54 simple interest. Keep in mind that 4.5 % is written in decimal form as 0.045. P= 800, r= 0.045, I= 54 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

54=( 800)( 0.045)( t)

DivEqn

.LHS /(800)(0.045).=.RHS /(800)(0.045).

54/(800)(0.045)=(800)(0.045)( t)/(800)(0.045)

CancelCommonFac

Cancel out common factors

54/(800)(0.045)=(800)(0.045)( t)/(800)(0.045)

SimpQuot

Simplify quotient

54/(800)(0.045)= t

Multiply

Multiply

54/36= t

CalcQuot

Calculate quotient

1.5= t

RearrangeEqn

Rearrange equation

t=1.5

We found that the interest reaches $54 in 1.5 years.