Question

Yvonne put $4,000 in a savings account. At the end of 3 years, the account had earned $960 in simple interest.

a.How much does she have in her account at the end of 3 years?
b.At what annual simple interest rate did the account grow?
c.How many more dollars would she have in her account if the interest rate were 1% greater?

For each question, show your steps and explain your work.

Answer 1

I = Prn

I = interest P = principal... amount invested
r = interest rate as a decimal
n = time periods

a. Interest + principal = amount in the account
$4,000 + $960 = $4,960

b. 960 = 4000 x r x 3
960 = 12000 x r
solve for r then multiply by 100 to get a percentage

`r= (960)/(12000) = (96)/(1200) = (8)/(100) =0.08 * 100\%=8\%`

c. find
`I=4000* (r+1\%)* 3`

`I=4000* (0.08+ (1)/(100)) * 3=4000* 0.09* 3=1,080`
$1,080 - $960 = $120