Chapter 6.6, Problem 38STP

To determine

To find:Value of the certificate after $8$ years.

Answer to Problem 38STP

Value of certificate after $8$ years $=\$790$

Explanation of Solution

Given information:

Principal amount $=\$500$

Time $=8$ years.

Interest percent $=7.25\%$

Concept:

  $I=prt$

Where

  $I=$ Simple interest.

  $p=$ Principal amount

  $t=$ time in years.

  $r=$ Annual interest rate.

Calculation:

From given information

Principal amount $=p=\$500$

Time $=t=8$ years

Interest percent $=R=7.25\%$

We know

Annual interest rate $=r=\frac{R}{100}$

  $\begin{array}{l}\Rightarrow r=\frac{7.25}{100}\\ \Rightarrow r=0.0725\end{array}$

On substituting values in above mentioned concept

We get

  $\begin{array}{l}I=prt\\ \Rightarrow I=\left(500\right)\left(0.0725\right)\left(8\right)\\ \Rightarrow I=\$290\end{array}$

Therefore,

Simple interest $=I=\$290$

Total Amount $=$ Principal amount $+$ Simple interest

  $\Rightarrow$ Value of certificate after $8$ years $=500+290=\$790$