Question

her player O oo Find the amount of simple interest that $400 would earn at 8% per year by the end of 3 years. O A. $96 OB. $11,200 O c. $3200 OD. D. $112 O E. $32

Answer 1

To answer this question, we need to use the next formula for simple interest:

`FV=PV\cdot(1+in)`

Where:

FV is the future value we need to find (in this case).

PV is the present value, that is, $400 (in this case).

i is the interest rate. In this case, we have 8% (0.08).

n is the number of periods (n = 3, in this case).

Then, we have:

`FV=400\cdot(1+(0.08)\cdot3)\Rightarrow FV=496`

That is, the FV is $496. Therefore, the simple interest is $(496-400 = 96).

Thus, the amount of simple interest that $400 would earn at 8% per year by the end of 3 years is $96 (option A).

In other words, the result can be obtained also if we have is $400 * (0.08)*3 = $96.