Hank earns $20 for each lawn he mows. During the month of October he mows 15 lawns. He puts 75% of his earnings in a savings account. What will his total savings account be if he keeps the money in the bank for 7 years at 5% simple interest?

D. If he put his money in a different bank for 12 years at 3% simple interest, would his total be more or less than after 7 years at 5% simple interest? By how much? (Show all work. Label your answers. 10 points)

Question

Hank earns $20 for each lawn he mows.  During the month of October he mows 15 lawns.  He puts 75% of his earnings in a savings account.  What will his total savings account be if he keeps the money in the bank for 7 years at 5% simple interest?

D.  If he put his money in a different bank for 12 years at 3% simple interest, would his total be more or less than after 7 years at 5% simple interest?  By how much?  (Show all work.  Label your answers.  10 points)

anonymous · Answer

Simple interest means he will only earn interest of the original deposit each year.

So let's figure how much that deposit was originally.

First calculate how much money he earned October. So $20 times $15 = $300

Next figure out how much of that $300 he is going to save. So $300 times .75 = $225

So he is going deposit $225

Next calculate how much interest he will earn for one year. So $225 times .05= $11.25

So he will earn $11.25 interest each year.

Next figure out how much interest he earns in 7 years. So $11.25 times 7= $78.75

Now figure out how money is in the account after 7 years. So $78.75 + $225 = $303.75

So he has $303.75 in the account after 7 years.

For question D, follow the same process.