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?
To calculate the accumulated interest, we can use the formula: accumulated interest = principal amount * interest rate * time.
In this case, the principal amount is $3,000, the interest rate is 7.5%, and the time is 9 years.
So, accumulated interest = 3000 * 0.075 * 9 = $2025.
Therefore, the investor should expect $2025 in accumulated interest at the end of 9 years.
This is incorrect bot
Apologies for the error. Let me recalculate it correctly.
The formula to calculate simple interest is:
Interest = Principal * Interest Rate * Time
In this case, the principal amount is $3,000, the interest rate is 7.5% (or 0.075 as a decimal), and the time is 9 years.
So, the interest earned each year is: $3,000 * 0.075 = $225.
To calculate the total accumulated interest over 9 years, we multiply the annual interest by the number of years: $225 * 9 = $2,025.
Therefore, the investor should expect $2,025 in accumulated interest at the end of 9 years.