Question

a) How much simple interest do you gain if you invest $400 at 8 % interest for 1 year?

If it helps I got $35.

b) For year 2, you decide to invest your new amount at 8 % interest but you compound the money quarterly for 1 year. Find the amount of interest you gain to the nearest dollar and cent.

Answer 1

P*R*T

Answer 2

Do u have a ti calculator

Answer 3

i have a scientific calculator

Answer 4

you're around the answer....it's not 35 it $ 32

Answer 5

Here it is typed out:\[I=Prt=($400)(0.08)(1)=$32\]

Answer 6

Get ursself one

Answer 7

@Shane_B yah i did that i meant $32

Answer 8

@TxStudent there's gota be a different way to do this.

Answer 9

Ru in accounting ?

Answer 10

?

Answer 11

were r u getting $432 from?

Answer 12

She had $400+$32 when she shifted the money over to compound interest ("For year 2, you decide to invest your new amount").

Anyway, here's the corrected version of my previous post:

\[A=P(1+\frac{r}{4})^4\]\[A=$432(1+\frac{0.08}{4})^4=$467.61\]
The interest gained from that would be \[$467.61-$432=$35.67\]

Answer 13

^^ That's part b...

Answer 14

If any of that doesn't make sense let me know and I can try to explain it better

Answer 15

^ that's the right formula for compounded interest

Answer 16

So $432 is the answer for A & $35.67 is the answer for B?

Answer 17

http://finedrafts.com/files/Larson%20PreCal%208th/Larson%20Precal%20CH3.pdf

page 221.

Answer 18

Question a only asked for the amount of simple interest gained...so it's just $32. Yes, $35.67 for b.

Answer 19

never really seen a simple interest. although I've seen that format in an appreciation or depreciation of goods/products y=mx+b

Answer 20

in banking transactions is what I meant.

Answer 21

Simple interest is used for short term loans....but you don't see it much

Answer 22

now that you mention it, I think Sallie Mae has that as one of the options in their loans, providing that the payments are fixed within certain amount of time.

Answer 23

joyce, use the link. it is quite helpful :), because you will be encountering more about compound interests.

Answer 24

Yes...and just for reference, the base formula to calculate the amount gained/lost from compound interest is:\[A=P(1+\frac{r}{n})^{nt}\]
P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n = number of times the interest is compounded per year

Answer 25

the n, changes into annually, biannually, quarterly, etc... so familiarize those terms.

Answer 26

ok THX!!

Answer 27

@joyce153: no problem :)

Answer 28

for continuous compounding \[A=Pe ^{rt}\] e is a fixed unit just like \[\pi\]