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.
about $1556.88
Practice makes perfect
If we keep money on the savings account, the bank pays us interest for the use of our money. 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 months)
We know that Stephanie is earning simple interest of 3.5 % on her money each month. We also know that her current account balance is $1325. We want to calculate her balance after 5 months. Keep in mind that 3.5 % is written in decimal form as 0.035.
p= 1325, r= 0.035, t= 5
To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.
After five months, the interest earned is about $231.88. To find Stephanie's balance after five months, we add the interest to the principal.
$ 1325+ $ 231.88=$1556.88
Samantha's balance after five months of earning simple interest is about $1556.88.
