Question

Sharla invests $275 in a simple interest bearing account for 16 years. The annual interest rate is 8%. Using the simple interest formula, I=Prt, how much interest will Sharla's initial investment earn over the 16 year period?

Answer 1

$352

Step By Step Explanation

Answer 2

I = Prt

I: interest earned
P: principle (initial invested amount)
r: rate (percentage)
t: time in years (duration)

Most often, when letters are side-by-side this means they are all factors of each other. If something is a factor of another, then multiply them. So, 275 times 8% or 8/100 or 0.08 times 16 years is equal to $352. With this total subtract $275 from $352. The interest earned is equal to $77.

$275 * 0.08 * 16 yrs = $352
$352 - $275 = $77
I = $77

This may seem confusing when saying aloud in order of the equation, "Interest equals $352". The total is $352, the interest earned is equal to $77. Conventions and platitudes are often erroneous.