Math

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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 -

    800 * 1.0382.5
    = 800 * 1.0977
    = 878.16

  • Math -

    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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