Question

Find the simple interest and the new balance for principal $875. rate 5 1/4 % time 3 years

Answer 1

Remember that

The simple interest formula is equal to

`A=P\mleft(1+rt\mright)`

`I=P\mleft(rt\mright)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

P=$875

r=5 1/4%=5+1/4=5.25%=5.25/100=0.0525

t=3 years

substitute

`\begin{gathered} I=875\cdot(0.0525\cdot3) \\ I=\$137.81 \end{gathered}`

The new balance is

A=P+I

A=875+137.81

A=$1,012.85