Question

To be able to take her dream vacation, Jane decides to save for 6 years. She opens a savings account with $600. The account pays simple interest at an annual rate of 3%. She doesn't make any more deposits. Answer the following questions. If necessary, refer to the list of financial formulas. Х ? (a) How much total interest will Jane earn? (b) What will the total amount in the account be (including interest)? Submi Save For Later Priva Check 2021 McGraw-Hill Education. All Rights Reserved. Terms of Use

Answer 1

a) $108 b) $708

1) Gathering the data

Time: 6 years

Principal: $600

Rate: 3% annually

2) Let's plug that data into the formula for Simple Interest

$\begin{gathered} A=P(1\text{ +rt)} \\ A=600(1+0.03\times6) \\ A=600(1+0.18) \\ A=600(1.18) \\ A=708 \end{gathered}$

So that investment will yield Principal plus Interest Rate $708.

a) The interest can be found by subtracting from P, A:

$A\text{ -P =708 -600 = 108}$

So Jane earned $108 on the interest rate.

b) The Total amount in the account, assuming there were no withdrawals is $708 as shown above