Question

The simple interest on an investment is directly proportional to the amount of the investment. By investing $2400 in a certain bond issue, you obtained an interest payment of $111.75 after 1 year. Find a mathematical model that gives the interest I for this bond issue after 1 year in terms of the amount invested P. (Round your answer to three decimal places.)

A. I = 0.047PB. I = 268,200PC. I = 21.477PD. I = 2400PE. I = 111.75P

Answer 1

Option A -
`I=0.047P`

Explanation:

Given : The simple interest on an investment is directly proportional to the amount of the investment. By investing $2400 in a certain bond issue, you obtained an interest payment of $111.75 after 1 year.

To Find : A mathematical model that gives the interest I for this bond issue after 1 year in terms of the amount invested P ?

Solution :

Using interest formula,

`I=P* R* T`

Where, I is the interest I=$111.75

P is the principal P=$2400

T is Time T=1 year

Substitute the value,

`111.75=2400* R* 1`

`R=(111.75)/(2400)`

`R=0.0465625`

`R=0.047`

A mathematical model that gives the interest I for this bond issue after 1 year in terms of the amount invested P is given by,

`I=P* 0.047* 1`

`I=0.047P`

Therefore, Option A is correct.