An investor puts $3,000 into a life insurance policy that pays 7.5% simple annual interest. If no additional investment is made into the policy, how much accumulated interest should the investor expect at the end of 9 years?
The accumulated interest can be calculated using the formula:
Accumulated Interest = Principal * Rate * Time
Where:
Principal = $3,000
Rate = 7.5% = 0.075 (as a decimal)
Time = 9 years
Substituting the given values into the formula:
Accumulated Interest = $3,000 * 0.075 * 9
Accumulated Interest = $2,025
Therefore, the investor should expect $2,025 in accumulated interest at the end of 9 years.