Question

Find the simple interest paid to the nearest cent for each principal, interestRate, and time.$1,450, 2.5%, 2 years

Answer 1

To calculate the simple interest of an invesment you have to use the following formula:

`A=P(1+rt)`

A= Total amount

P= principal invesment

r=interest rate, expressed as a decimal value

t= time

For a principal invespent of P=$1450, an interest rate of r=2.5/100=0.025 and a time of 2 years, the total amount is:

`\begin{gathered} A=P(1+rt) \\ A=1450(1+0.025\cdot2) \\ A=1522.50 \end{gathered}`

The interest paid I is equal to the total amount A minus the principal investment P

`\begin{gathered} I=A-P \\ I=1522.50-1450 \\ I=72.5 \end{gathered}`

The interest paid is $72.50