Posted by Name on Tuesday, October 25, 2011 at 8:37pm.
SIMPLE INTEREST
kelsie has an $800 savings bond which she has had for 2 1/2 years. The bond pays simple interest at the rate of 3.8% per year. If kelsie cashes the bond, what amount will she receive?

Math  Steve, Wednesday, October 26, 2011 at 5:31am
800 * 1.038^{2.5}
= 800 * 1.0977
= 878.16

Math  Steve, Wednesday, October 26, 2011 at 5:33am
Oops. That was compound interest.
Simple interest pays .038*800 = 30.40 each year
SO, after 2.5 years, she has earned 2.5*30.40 = 76.00 in interest.
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