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Yvonne put $4,000 in a savings account. At the end of 3 years, the account had earned $960 in simple interest.

a.How much does she have in her account at the end of 3 years?
b.At what annual simple interest rate did the account grow?
c.How many more dollars would she have in her account if the interest rate were 1% greater?

For each question, show your steps and explain your work.

Answer :

I = Prn
 
I = interest  P = principal... amount invested
r = interest rate as a decimal
n = time periods
 
a. Interest + principal = amount in the account
    $4,000 + $960 = $4,960
 
b. 960 = 4000 x r x 3
    960 = 12000 x r
    solve for r then multiply by 100 to get a percentage
    [tex]r= \frac{960}{12000} = \frac{96}{1200} = \frac{8}{100} =0.08 \times 100\%=8\%[/tex]
 
c. find [tex]I=4000\times (r+1\%)\times 3[/tex]
    [tex]I=4000\times (0.08+ \frac{1}{100}) \times 3=4000\times 0.09\times 3=1,080[/tex]
    $1,080 - $960 = $120 

    

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