An investor puts $4,500 into a life insurance policy that pays 8.0% simple annual interest. If no additional investment is made into the policy, how much accumulated interest should the investor expect at the end of 8 years?
The formula for simple interest is:
I = P*R*T
Where:
I = Interest earned
P = Principal amount (initial investment)
R = Interest rate
T = Time period
Plugging in the given values, we get:
I = 4,500 * 0.08 * 8
I = $2,880
Therefore, the investor should expect $2,880 in accumulated interest at the end of 8 years.
To calculate the accumulated interest on a life insurance policy, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Given:
Principal (P) = $4,500
Rate (R) = 8.0% or 0.08 (in decimal form)
Time (T) = 8 years
Substituting the values into the formula, we get:
Interest = $4,500 x 0.08 x 8
Simplifying, we have:
Interest = $3,600
Therefore, the investor can expect $3,600 of accumulated interest at the end of 8 years.
To calculate the accumulated interest on the life insurance policy, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Given:
Principal (P) = $4,500
Rate (R) = 8.0% = 0.08 (in decimal form)
Time (T) = 8 years
Using the formula, we can calculate the accumulated interest:
Interest = $4,500 x 0.08 x 8
Interest = $2,880
Therefore, the investor should expect $2,880 of accumulated interest at the end of 8 years.