Question

simple interest directions: read each of the problems below, determine which formula should be used, and then find the solution. problem 1. mrs. baxter deposits $2,000 in an account that earns 5% simple interest. how much is mrs. baxter’s investment worth after 8 years? formula & work solution

Explanation:

Step1: Recall simple interest formula

The formula for simple interest is $I = P \times r \times t$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years. The total amount $A$ is the principal plus the interest, so $A = P + I = P(1 + rt)$.

Here, $P = \$2000$, $r = 5\% = 0.05$, and $t = 8$ years.

Step2: Calculate the total amount

Substitute the values into the formula:

$$\begin{align*} A &= 2000 \times (1 + 0.05 \times 8) \\ &= 2000 \times (1 + 0.4) \\ &= 2000 \times 1.4 \\ &= 2800 \end{align*}$$

Answer:

$\$2800$