Question

Pocahontas opens a savings account with $640 dollars that earns 3.9% interest per year not compounded. How much money to the nearest penny will Pocahontas have in 8 years

Answer 1

Given:

Principal value = $640

Rate of interest = 3.9% not compounded

Number of years = 8

To find:

The amount after 8 years.

Solution:

It is given that the interest is not compounded. It means, we need to find simple interest.

Formula for simple interest:

$I=P\times r\times t$

where, P is principal, r is rate of interest and t is time in years.

Put P=640, r=0.039 and t=8.

$I=640\times 0.039\times 8$

$I=199.68$

So, the interest is $199.68.

Now, amount after 8 years is

$A=P+I$

where, P is principal and I is interest.

$A=640+199.68$

$A=839.68$

Therefore, the amount after 8 years is $839.68.