Question

practice

1. ethan put $700 into a certificate of deposit (cd) account that earns 1.8% interest each year. what will the interest of the cd account be after 6 years?

1. kelly opened a bank account that earns 1.2% simple interest each year. after 7 years, kelly will earn $126 in interest. how much did kelly deposit when she opened the account?

Explanation:

Problem 1

Step1: Recall simple interest formula

The formula for simple interest is $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years.

Step2: Convert rate to decimal

The annual interest rate $r = 1.8\% = \frac{1.8}{100}= 0.018$.

Step3: Identify values

Here, $P = \$700$, $r = 0.018$, and $t = 6$ years.

Step4: Calculate interest

Substitute the values into the formula: $I=700\times0.018\times6$. First, calculate $700\times0.018 = 12.6$. Then, $12.6\times6 = 75.6$.

Step1: Recall simple interest formula

The formula for simple interest is $I = P \times r \times t$, and we need to solve for $P$. Rearranging the formula gives $P=\frac{I}{r\times t}$.

Step2: Convert rate to decimal

The annual interest rate $r = 1.2\%=\frac{1.2}{100} = 0.012$.

Step3: Identify values

Here, $I = \$126$, $r = 0.012$, and $t = 7$ years.

Step4: Calculate principal

Substitute the values into the formula: $P=\frac{126}{0.012\times7}$. First, calculate $0.012\times7 = 0.084$. Then, $\frac{126}{0.084}=1500$.

Answer:

The interest of the CD account after 6 years will be $\$75.6$.

Problem 2