Determine the simple interest earned and the final account balance for the following inves… — Armed Services Vocational Aptitude Battery (ASVAB)

Determine the simple interest earned and the final account balance for the following investment scenario.

Answer:Sarah invests

\$500

in a savings certificate that earns an annual simple interest rate of

4\%

. After

2

years, she will have earned exactly

\$

【40】 in interest, and her final account balance will be

\$

【540】.

The interest earned is

40, and the final account balance is

540.

The correct interest amount is found by multiplying the principal (

\$500

), the annual rate as a decimal (

0.04

), and the time in years (

2

). The final balance is found by adding this computed interest to the original principal.

Identify the given values from the problem statement.

Principal (

P

) =

500

, Rate (

R

) =

4\% = 0.04

, Time (

T

) =

2

years.

These are the essential parameters needed to use the simple interest formula.

Calculate the total simple interest earned using the formula

I = PRT

I = 500 \times 0.04 \times 2 = 40

This determines the additional money earned over the 2-year duration.

Calculate the final account balance by adding the interest to the principal.

A = 500 + 40 = 540

The total final balance (

A

) is always the sum of the original investment (

P

) and the interest earned (

I

Calculating simple interest (

I = PRT

) and total balance (

A = P + I

)

The final balance can also be calculated directly using the combined formula

A = P(1 + RT)

, which gives

A = 500(1 + 0.04 \times 2) = 500(1.08) = 540

Estimated Time:1m 0s

Question