Yvonne put $4,000 in a savings account. At the end of 3 years, the account had earned $960 in simple interest.

a.How much does she have in her account at the end of 3 years?
b.At what annual simple interest rate did the account grow?
c.How many more dollars would she have in her account if the interest rate were 1% greater?

For each question, show your steps and explain your work.

Question

Yvonne put $4,000 in a savings account.  At the end of 3 years, the account had earned $960 in simple interest.

a.How much does she have in her account at the end of 3 years?
b.At what annual simple interest rate did the account grow? 
c.How many more dollars would she have in her account if the interest rate were 1% greater? 

For each question, show your steps and explain your work.

campbell_st · Answer

I = Prn

I = interest  P = principal... amount invested
r = interest rate as a decimal
n = time periods

a. Interest + principal = amount in the account

b. 960 = 4000 x r x 3

960 = 12000 x r

solve for r then multiply by 100 to get a percentage

c. find I = 4000 x ( r + 1)/100 x 3