Question

You invest $2,500 in each of two accounts. Account a earns a simple interest at a rate of 4% over 3 years. Account b earns a simple interest at a rate of 6% over 21 months. Find the interest earned by each accounts.

Answer 1

Answer: Interest on A = $300 , Interest on B = $262.5

Explanation:

Formula for finding simple interest

I = P x R x T

----------- , Where P = Principal Invested., R = Interest Percentage and

100

T = Time or duration of the investments.

Account (A) simple interest =

I = 2,500 x 4 x 3

-------------------

100

= 25 x 12

= 1200/4

= $300

Therefoe account A interest at the end of the 3rd year = $300

Now for account ( B ) at te same principal of $2,500

I = 2,500 x 6 x 21 months

------------------------------ , Please bear in mind that the 21 months needs to

100,

to be converted to year because the formula only obey years and not in months

Therefore, the 21 years = 1 year 9 months since 12 calender months makes a year. Now , 9 month therefore is 3/4 of a year, so

21 months = one three quarter of a year. ( 1³/₄ )

21 months = 7/4 converted to improper fraction.

Now substitute this in the formula above

I = 2500 x 6 x 7

------------------

100 x 4

= 25 x 21

---------

2

= 2100

-------

2 x 4

= 2100

------

8

= $262.5