Question

Boden's account has a principal of $300 and a simple interest rate of 3.7%. Complete the number line. How much money will be in the account after 4 years, assuming Boden does not add or take out any money?

Answer 1

Recall that the simple interest is only effective over the principal amount. So, it doesn't take into account the generated interest.

So, in one year, the interest would be

`300\cdot(3.7)/(100)=11.1`

since we have 4 years, we will have

`4\cdot11.1\text{ = 44.4}`

of interest.

We add this to the principal, so we have

`300+44.4=344.4`

so in the end, the account would have 344.4