Question

You invest $2,500 in each of two accounts. Account a earns a simple interest at a rate of 4% over 3 years. Account b earns a simple interest at a rate of 6% over 21 months. Find the interest earned by each accounts.

Answer 1

Answer: Interest on A = $300 , Interest on B = $262.5

Step-by-step explanation:

  Formula for finding simple interest

 I = P x R x T

      -----------  , Where P = Principal Invested., R = Interest Percentage and

         100

T = Time or duration of the investments.

Account  (A) simple interest =

I  = 2,500 x 4 x 3

        -------------------

              100

    = 25 x 12

    = 1200/4

    = $300

Therefoe account A interest at the end of the 3rd year = $300

Now for account ( B ) at te same principal of $2,500

 I = 2,500 x 6 x 21 months

       ------------------------------  , Please bear in mind that the 21 months needs to

                  100,

to be converted to year because the formula only obey years and not in months

Therefore, the 21 years = 1 year 9 months since 12 calender months makes a year. Now , 9 month therefore is 3/4 of a year, so

21 months  = one three quarter of a  year.  ( 1³/₄ )

21 months =    7/4 converted to improper fraction.

     Now substitute this in the formula above

I  = 2500 x 6 x 7

      ------------------

         100 x 4

   =  25 x 21

       ---------

           2

  =   2100

       -------

        2 x 4

  =  2100

      ------

         8

  =  $262.5