A. Sharif deposits $2,500 into a savings account which earns 5% simple interest

per year. How much interest will Sharif earn after 2 years? If there are no
deposits and no withdrawals, how much will be in the savings account after
12 years?
B. Chang put $1000 in an account. The account earns $100 in simple interest in
4 years. What is the annual interest rate? If there are no deposits and no
withdrawals, how much will be in the savings account after 15 years?
C. A bank offers three savings accounts at the given interest rates.
Principal Simple Interest Rate
< $500 1.5%
$500 – $5,000 2.0 %
> $5,000 3.0 %
The simple interest rate is determined by the principal. How long does it
take an account with a principal of $800 to earn $100 in interest?
D. You borrow some money to buy a laptop. The simple interest rate is 15%.
You pay off the loan after 5 years. The amount you paid off is $1050. How
much did you borrow for the laptop? How much interest did you pay?
E. Find the annual interest rate, R, if I = $24, P = $400, and t = 2 years.

1 answer

Let's go through each of the problems step by step.

A. Sharif's Savings Account

  1. Interest earned after 2 years:

    • Formula for simple interest: \[ I = P \times r \times t \]

    • Where:

      • \( P = 2500 \) (principal)
      • \( r = 0.05 \) (annual interest rate)
      • \( t = 2 \) (time in years)
    • Calculation: \[ I = 2500 \times 0.05 \times 2 = 2500 \times 0.1 = 250 \]

    • So, after 2 years, Sharif will earn $250 in interest.

  2. Total amount in the account after 12 years:

    • For 12 years:

    • Calculation: \[ I = 2500 \times 0.05 \times 12 = 2500 \times 0.6 = 1500 \]

    • Total amount = Principal + Interest: \[ 2500 + 1500 = 4000 \]

    • So, Sharif will have $4000 in the savings account after 12 years.

B. Chang's Account

  1. Finding the annual interest rate:

    • Total interest earned over 4 years = $100

    • Using the formula: \[ I = P \times r \times t \]

    • Rearranged to find \( r \): \[ r = \frac{I}{P \times t} \]

    • Where:

      • \( I = 100 \)
      • \( P = 1000 \)
      • \( t = 4 \)
    • Calculation: \[ r = \frac{100}{1000 \times 4} = \frac{100}{4000} = 0.025 \]

    • So, the annual interest rate is 2.5%.

  2. Amount in the account after 15 years:

    • Using the 2.5% rate:

    • Total interest over 15 years: \[ I = 1000 \times 0.025 \times 15 = 1000 \times 0.375 = 375 \]

    • Total amount: \[ 1000 + 375 = 1375 \]

    • So, Chang will have $1375 in the savings account after 15 years.

C. Bank Savings Account

  1. Finding time to earn $100 in interest with a principal of $800:
    • With a principal of $800, the interest rate is 2%.

    • Using the formula: \[ t = \frac{I}{P \times r} \]

    • Where:

      • \( I = 100 \)
      • \( P = 800 \)
      • \( r = 0.02 \)
    • Calculation: \[ t = \frac{100}{800 \times 0.02} = \frac{100}{16} = 6.25 \]

    • So, it takes 6.25 years to earn $100 in interest.

D. Laptop Loan

  1. Finding the original amount borrowed:

    • Using the formula for total amount paid back: \[ A = P + I \] \[ I = P \times r \times t \]

    • We know:

    • \( A = 1050 \)

    • \( r = 0.15 \)

    • \( t = 5 \)

    • Rearranging gives: \[ A = P + (P \times 0.15 \times 5) \] \[ 1050 = P + 0.75P \] \[ 1050 = 1.75P \]

    • Solving for \( P \): \[ P = \frac{1050}{1.75} = 600 \]

    • So, the amount borrowed for the laptop is $600.

  2. Finding the interest paid:

    • Using \( I = P \times r \times t \): \[ I = 600 \times 0.15 \times 5 = 600 \times 0.75 = 450 \]

    • Thus, the interest paid is $450.

E. Finding the Annual Interest Rate (R)

  1. Using the given values:
    • Using the formula \( I = P \times r \times t \):

    • Rearranging gives: \[ r = \frac{I}{P \times t} \]

    • Where:

      • \( I = 24 \)
      • \( P = 400 \)
      • \( t = 2 \)
    • Calculation: \[ r = \frac{24}{400 \times 2} = \frac{24}{800} = 0.03 \]

    • So, the annual interest rate \( R \) is 3%.