Question

Ike invests $7,660 in an account paying 7.27% simple interest annually. How much interest has Ike gained after four years? a. $222.75 b. $2,227.53 c. $1,392.20 d. $13,922.05

Answer 1

$7,660 x .0727 = $556.882
$556.882 x 4 = $2,227.528

Answer 2

Answer: b. $2227.53

Explanation:

The formula of simple interest is given by :-

`\text{Simple interest}=P\cdot r\cdot t`, where P =principal amount, r is the rate of interest (in decimal) and t is time in years./

Given : Principal amount P = 7,660

time t= 4 years

rate of interest = 7.27%=0.0727

Then, The simple interest is given for 4 years is by :-

`\text{Simple interest}=7660*0.0727*4\\\Rightarrow\ \text{Simple interest}=\$2227.528\approx\$2227.53`