Question

Jasmine invested $4000 in a Building Society which paid simple interest at a rate of 7% per annum to its investors. After 2 years, the rate was increased to 7.6% per annum. Find the amount she had at the end of 7 years.

Answer 1

To find the total amount Jasmine had at the end of 7 years, we calculated simple interest at 7% for the first 2 years, and at 7.6% for the next 5 years. Adding both interest amounts to the principal of $4000, Jasmine had a total of $6080 at the end of 7 years.

Step-by-step explanation:

The subject of the question is simple interest, which is a financial concept in which the amount of interest earned is based on the original principal and does not compound. Jasmine invested $4000 in a Building Society at a 7% per annum rate for the first 2 years, and then the rate increased to 7.6% per annum for the next 5 years.

To calculate the total amount she had at the end of 7 years, we need to calculate the simple interest part by part:

1. First 2 years at 7% per annum: Interest = Principal × Rate × Time = $4000 × 7% × 2 = $4000 × 0.07 × 2 = $560
2. Next 5 years at 7.6% per annum: Interest = Principal × Rate × Time = $4000 × 7.6% × 5 = $4000 × 0.076 × 5 = $1520

Add the simple interest to the original principal to find the total amount: Total = Principal + Interest (from both periods) = $4000 + $560 + $1520 = $6080.

Therefore, Jasmine had $6080 at the end of 7 years