Exercise 25 Page 270

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 $3000 in a certificate of deposit with a simple annual interest rate of 5.6 %. We want to calculate the time it will take to reach $336 simple interest. Keep in mind that 5.6 % is written in decimal form as 0.056. P= 3000, r= 0.056, I= 336 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

336=( 3000)( 0.056)( t)

DivEqn

.LHS /(3000)(0.056).=.RHS /(3000)(0.056).

336/(3000)(0.056)=(3000)(0.056)( t)/(3000)(0.056)

CancelCommonFac

Cancel out common factors

336/(3000)(0.056)=(3000)(0.056)( t)/(3000)(0.056)

SimpQuot

Simplify quotient

336/(3000)(0.056)= t

Multiply

Multiply

336/168= t

CalcQuot

Calculate quotient

2= t

RearrangeEqn

Rearrange equation

t=2

We found that the interest reaches $336 in 2 years.