Examkin

Question

Difficulty: EasySimple Interest Applications

A customer invests $1,500\$1,500 in a savings certificate that pays an annual simple interest rate of 4%4\%. How much total interest, in dollars, will the investment earn after exactly 33 years?

Answer: 180

Answer

The investment will earn 180 dollars in interest.
Using the simple interest formula I=PRTI = PRT, substituting the given values yields I=1500×0.04×3=180I = 1500 \times 0.04 \times 3 = 180. The total interest earned is $180\$180.

Step-by-Step Solution

1
Identify the given values for the simple interest formula.
Principal (PP) = 1,5001,500, Rate (RR) = 4%4\% (or 0.040.04), Time (TT) = 33 years.
These are the necessary components to calculate simple interest.
2
Multiply the principal by the annual interest rate to find the interest earned in one year.
1500×0.04=601500 \times 0.04 = 60
This determines the annual interest amount.
3
Multiply the annual interest by the number of years.
60×3=18060 \times 3 = 180
This gives the total simple interest over the entire time period.

Key Concept

Calculating simple interest using the formula I=PRTI = PRT.
Rate this question

Topics

Simple Interest Applications

More questions from this topic