The Principal is the amount you deposit at the start, so P= $500 The rate is 7%, as you will be earning 7% extra yearly in simple interest. As a decimal, the rate is 0.07 - 7 PER CENT literally means per 100, so 7/100 is 0.07. However, when actually figuring out the simple interest, you have to add 1 to 0.07 because you are earning 7% ON TOP OF your original amount. The time is 10, as you are leaving the money in the account for 10 years, and time is measured in the given unit Now, let's plug in this information into the general formulas: I=Prt where I is the just the interest earned I=500×0.07×10 I=$350
A=P(1+r/100×t) where A is the total amount (original sum of money plus interest) A=500(1+0.07×10) A=$850
