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1. Diana deposits $725 into savingsa ccount that pays 2.3% simple annual interest. How much interest will Diana earn after 18 months?

1. Diana deposits $725 into savingsa ccount that pays 2.3% simple annual interest. How much interest will Diana earn after 18 months?

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
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Topic: Simple Interest

1. Diana deposits $725 into savingsa ccount that pays 2.3% simple annual interest. How much interest will Diana earn after 18 months?

 

*Pls. refer the solution from the giveb reference (attached image)

 

 

SIMPLE INTEREST Simple interest:I = pxr xt I= interest earned after t years p=money borrowed or invested r= annual rate of interest t= the length of time you borrow or invest number of months (actual time) When time is given in months, t 12 number of days When time is given in days, t 365 Convert rate into decimal. Еxamples: 1. Sarah deposits $4,000 at a bank at an interest rate of 5% per year. How much interest will she earn at the end of 3 years? Solution: P= $4000 r = 5% 5% * = 100% 20 or 0.05 - convert to decimal t=3 Using the formula: I = Prt In 3 years the interest paid is I = 4000 • 5% • 3 I = 4000 • 0.05 + 3 3 $600 and the accumulated or final amount is $4,600. I= 600 2. A loan of $100,000 has been issued for 5 years. Compute the amount to be repaid to the lender if simple interest is charged at 4% per year. Solution: P = $100,000 r = 4% =1 or 0.04 100% convert to decimal 4% • 25 t = 5 Using the formula: 1 = Prt 1 = 100,000 + 4% • 5 In 5 years the interest paid is $20,000 and the accumulated or final amount is 120,000. 1 = 100,000 - 0.04 + 5 1 = 20,000 3. Raymond bought a car for $40, 000. He took a $20,000 loan from a bank at an interest rate of 15% per year for a 3-year period. What is the total amount (interest and loan) that he would have to pay the bank at the end of 3 years? Solution: P = $20,000 r = 15% or 0.15 t = 3 Using the formula: 1 = Prt I= 20,000 • 15% • 3 I= 20,000 • 0.15 • 3 I = 9,000 In 3 years the interest paid is $9,000 and the accumulated value of final amount is the sum of the principal and the interest ($20,000 + 9,000 = $29,000). The accumulated amount is also called future value or maturity value designated F. It is calculated using the formula. F = P +1 = P + Prt = P(1+ rt) Where: F is the final amount I is the interest3B
Transcribed Image Text:SIMPLE INTEREST Simple interest:I = pxr xt I= interest earned after t years p=money borrowed or invested r= annual rate of interest t= the length of time you borrow or invest number of months (actual time) When time is given in months, t 12 number of days When time is given in days, t 365 Convert rate into decimal. Еxamples: 1. Sarah deposits $4,000 at a bank at an interest rate of 5% per year. How much interest will she earn at the end of 3 years? Solution: P= $4000 r = 5% 5% * = 100% 20 or 0.05 - convert to decimal t=3 Using the formula: I = Prt In 3 years the interest paid is I = 4000 • 5% • 3 I = 4000 • 0.05 + 3 3 $600 and the accumulated or final amount is $4,600. I= 600 2. A loan of $100,000 has been issued for 5 years. Compute the amount to be repaid to the lender if simple interest is charged at 4% per year. Solution: P = $100,000 r = 4% =1 or 0.04 100% convert to decimal 4% • 25 t = 5 Using the formula: 1 = Prt 1 = 100,000 + 4% • 5 In 5 years the interest paid is $20,000 and the accumulated or final amount is 120,000. 1 = 100,000 - 0.04 + 5 1 = 20,000 3. Raymond bought a car for $40, 000. He took a $20,000 loan from a bank at an interest rate of 15% per year for a 3-year period. What is the total amount (interest and loan) that he would have to pay the bank at the end of 3 years? Solution: P = $20,000 r = 15% or 0.15 t = 3 Using the formula: 1 = Prt I= 20,000 • 15% • 3 I= 20,000 • 0.15 • 3 I = 9,000 In 3 years the interest paid is $9,000 and the accumulated value of final amount is the sum of the principal and the interest ($20,000 + 9,000 = $29,000). The accumulated amount is also called future value or maturity value designated F. It is calculated using the formula. F = P +1 = P + Prt = P(1+ rt) Where: F is the final amount I is the interest3B
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