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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?

800 * 1.038^{2.5} = 800 * 1.0977 = 878.16

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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