An investor puts $4,500 into a life insurance policy that pays 8.0% simple annual interest. If no additional investment is made into the policy, how much accumulated interest should the investor expect at the end of 8 years?

Answer 1

The formula for calculating simple interest is:

Interest = Principal x Rate x Time

In this case, the principal is $4,500, the rate is 8.0% (or 0.08), and the time is 8 years.

Interest = $4,500 x 0.08 x 8
Interest = $3,600

Therefore, the investor should expect $3,600 in accumulated interest at the end of 8 years.