Question

Tyrell Otis deposited his IRS refund check for $760 at 5% and made no other deposits or withdrawals. How much simple interest did his money earn in 3 months? What is the final amount in the account?​

Answer 1

He earned $114 in interest.

The final amount in the account is $874

Explanation:

Initial balance (b): $760

Interest rate (i): 0.05

Period (n): 3 months

Simple interest applications yield the same amount in interest every period. Therefore, the total simple interest earned can be defined by:

`I = n*B*i\\I= 3*760*0.05\\I=114`

The final amount (A) in the account is the initial balance plus the interest earned in 3 months.

`A = 760 +114\\A=874`

He earned $114 in interest and the final amount in the account is $874