$9,500 is invested at 9% annum simple interest for five years.
a)what is the amount of simple interest payable?
b)calculate the amount accruing for the investment
To calculate the simple interest and amount accruing for the investment, we will use the formulas:
Simple Interest = Principal * Rate * Time
Amount Accruing = Principal + Simple Interest
a) To find the amount of simple interest payable, we can use the formula:
Simple Interest = Principal * Rate * Time
Given:
Principal = $9,500
Rate = 9% per annum
Time = 5 years
First, convert the rate from a percentage to a decimal by dividing it by 100:
Rate = 9/100 = 0.09
Now, substitute the values into the formula:
Simple Interest = $9,500 * 0.09 * 5
Calculate the simple interest:
Simple Interest = $9,500 * 0.45
Simple Interest = $4,275
Therefore, the amount of simple interest payable is $4,275.
b) To calculate the amount accruing for the investment, we can use the formula:
Amount Accruing = Principal + Simple Interest
Given:
Principal = $9,500
Simple Interest = $4,275
Substitute the values into the formula:
Amount Accruing = $9,500 + $4,275
Calculate the amount accruing:
Amount Accruing = $13,775
Therefore, the amount accruing for the investment after 5 years is $13,775.