Question

Joyce Rhee deposits $1,000 in an account that pays an annual 4.5% interest rate. Determine the simple interest and the amount in the account for (a) 5 years, (b) 7 months, and (c) 11 days.

a) a) $225, $1,225; b) $31.50, $1,031.50; c) $1.23, $1,001.23
b) a) $45, $1,045; b) $31.50, $1,031.50; c) $0.45, $1,000.45
c) a) $225, $1,225; b) $35, $1,035; c) $4.50, $1,004.50
d) a) $45, $1,045; b) $35, $1,035; c) $4.50, $1,004.50

Answer 1

To find the simple interest and the amount in the account, we use the formula: Simple Interest = Principal × Rate × Time.

Step-by-step explanation:

To find the simple interest, we can use the formula: Simple Interest = Principal × Rate × Time. Let's calculate the simple interest and the amount in the account for each scenario:

a) 5 years:
Simple Interest = $1,000 × 0.045 × 5 = $225
Total Amount = Principal + Simple Interest = $1,000 + $225 = $1,225

b) 7 months:
We need to convert the time to years. 7 months is equivalent to 7/12 years.
Simple Interest = $1,000 × 0.045 × (7/12) = $31.50
Total Amount = Principal + Simple Interest = $1,000 + $31.50 = $1,031.50

c) 11 days:
We need to convert the time to years. 11 days is equivalent to 11/365 years.
Simple Interest = $1,000 × 0.045 × (11/365) = $1.23
Total Amount = Principal + Simple Interest = $1,000 + $1.23 = $1,001.23