Question

Note: Enter your answer and show all the steps that you use to solve this problem in the space provided. 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?

Answer 1

The amount invested by Yvonne = $ 4,000

Time of investment = 3 years

The simple interest earned by Yvonne in 3 years = $ 960

a). Therefore, the amount Yvonne earned by the end of three years is

= principal + interest earned

= 4,000 + 960

= $ 4,960

b). The formula for simple interest(S.I.) is given by :

`$S.I. =(P.T.R)/(100)$`

or
`$R = (SI * 100)/(P.T)$`

`$ = (960 * 100)/(4000 * 3)$`

= 8%

c). Now if the interest rate is 1% greater, i.e. R = (8+1) = 9%

∴
`$SI =(P.T.R)/(100)$`

`$SI =(4000 * 3 * 9)/(100)$`

SI = $1,080

Therefore, the amount at the end of 3 years with 9% rate of interest will be

= 4000 + 1080

= $ 5080

Thus, Yvonne will have 5080 - 4960 = $ 120 money more in her account if the rate of interest was 1% greater.