Question

The simple interest rate of a certain bank on deposits is 20% each year. If the starting balance is $136, find the simple interest accrued at the end of 7 years.
$170
$140
$190.40
$90.40

Answer 1

To calculate the simple interest accrued, we can use the formula for simple interest:

\[
\text{Simple Interest} = P \times r \times t
\]

where:
- \( P \) is the principal amount (initial balance),
- \( r \) is the rate of interest (as a decimal),
- \( t \) is the time in years.

Given:
- \( P = 136 \) dollars,
- \( r = 20\% = 0.20 \),
- \( t = 7 \) years.

Now, plug the values into the formula:

\[
\text{Simple Interest} = 136 \times 0.20 \times 7
\]

Calculating step by step:

1. Calculate \( 0.20 \times 7 \):
\[
0.20 \times 7 = 1.4
\]

2. Now multiply by the principal:
\[
136 \times 1.4 = 190.4
\]

Therefore, the simple interest accrued at the end of 7 years is **$190.40**.