Exercise 2 Page 171

If we have a 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 years)We are given that the principal is $1500, the interest rate is 4.25 %, and the time is 4 years. We want to find the simple interest earned to the nearest cent. Keep in mind that 4.25 % is written in decimal form as 0.0425. p= 1500, r= 0.0425, t= 4 To calculate the interest, let's substitute these values into the simple interest formula and evaluate the right-hand side.

I=prt

SubstituteValues

Substitute values

I= 1500( 0.0425)( 4)

Multiply

Multiply

I=255

The simple interest earned is $ 255.