Question

Compute the simple interest INT for the specified length of time and the future value FV at the end of that time in dollars). Round all answers to the nearest cent $3,000 is invested for 2 years at 7 per year.

Answer 1

To calculate the simple interest, we will use the formula:

INT = Principal * Annual Interest Rate * Time (Years)

Here, the principal is $3000, the annual interest rate is 7% (or 0.07 when expressed as a decimal), and the time in years is 2. Plugging these values into the formula, we get:

INT = 3000 * 0.07 * 2

This gives us the simple interest, which turns out to be $420.

Next, we want to find the future value of the investment at the end of the 2 years. We can find this by adding the simple interest we calculated to the original principal amount. This can be formulated as:

FV = Principal + INT

FV = 3000 + 420

This gives us a future value of $3420.

So, after 2 years, the interest earned is $420 and the total amount of money you will have is $3420.