Question

Use the simple interest formula to find the ending balance 5000 at 5% for 3.5 years

Answer 1

Given: Principal(P) = $ 5000 , T = 3.5 years and R = 5%.

Using the formula of Simple Interest (I) given by;

`I = (P* R * T)/(100)` .......[1] , where P is the Principal amount of money to be invested, R be the rate of interest and T be the time.

Substitute the given values of P , R and T in [1] we have;

`I = (P * R * T)/(100) = (5000* 5 * 3.5)/(100)`

`I = 50 * 5 * 3.5 = 250 * 3.5`

Simplify:

`I = \$ 175`

An Ending balance is calculated by subtracting cash outflows, interest paid for financing and principal paid on financing.

Ending Balance = $ 5000 + $ 175 = $ 5,175.

Therefore, the ending balance is $ 5,175