Suppose you deposit $350 in a bank account that pays 6% annual simple interest. Find the interest earned in 4 months and in 1 year.
To find the interest earned in 4 months, we need to calculate the simple interest for that period.
First, we convert 4 months into a fraction of a year. There are 12 months in a year, so 4 months is equal to 4/12, which simplifies to 1/3 or approximately 0.3333 years.
Next, we can use the simple interest formula to calculate the interest earned:
Interest = Principal × Rate × Time
Where:
Principal = $350 (the amount deposited)
Rate = 6% (expressed as a decimal, so 6/100 = 0.06)
Time = 0.3333 years (the period in years)
Now we can substitute the values into the formula:
Interest = $350 × 0.06 × 0.3333
Calculating the expression:
Interest = $7.00
Therefore, the interest earned in 4 months is $7.00.
To find the interest earned in 1 year, we can use the same simple interest formula:
Interest = Principal × Rate × Time
Where:
Principal = $350 (the amount deposited)
Rate = 6% (expressed as a decimal, so 6/100 = 0.06)
Time = 1 year
Now we can substitute the values into the formula:
Interest = $350 × 0.06 × 1
Calculating the expression:
Interest = $21.00
Therefore, the interest earned in 1 year is $21.00.
To summarize:
- The interest earned in 4 months is $7.00.
- The interest earned in 1 year is $21.00.
I = Prt
I = 350 * 0.06 * 0.3333333
I = $7.00
I = 350 * 0.06
I = ?