A person invests $500 on June 4, 2015 in an account which earns 7% simple interest. Determine the value of the investment on October 18, 2015.
I = PRT
I = 500 * 0.07 * 0.3726
I = ?
Add the interest to the principle.
To determine the value of the investment on October 18, 2015, we will use the simple interest formula:
Simple Interest = Principal * Rate * Time
Where:
- Principal is the initial amount invested ($500)
- Rate is the interest rate (7% or 0.07)
- Time is the duration in years
First, let's calculate the time between June 4, 2015, and October 18, 2015:
Time = Number of days / Number of days in a year
Since there are 365 days in a year, the time becomes:
Time = 136 / 365 = 0.3726 (approximately)
Next, let's calculate the simple interest:
Simple Interest = $500 * 0.07 * 0.3726
Simple Interest = $13.06 (approximately)
To find the value of the investment, we add the simple interest to the principal:
Value of Investment = Principal + Simple Interest
Value of Investment = $500 + $13.06
Value of Investment = $513.06
Therefore, the value of the investment on October 18, 2015, is approximately $513.06.