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.
2 years
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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.
