Chapter 7.7, Problem 3E

To determine

To find: the simple interest and balance of the account

Answer to Problem 3E

The simple interest is $\$140$ and balance is $\$540$

Explanation of Solution

Given information: Principal amount $P=\$500$ , $\text{annual}\text{intrest rate r = 7\%}$ and $\text{time t=4 years}$

Concept Used:

Simple interest problem requires the use of the following formula:

  $\text{Simple}\text{}\text{Interest=Princal×Rate×Time}$

  $\text{Balance = P+S}\text{.I}\text{.}$

Calculation:

As per the given problem

  $P=\$500,r=7\%=0.07,t=4\text{year}$

Substitute the values in the formula

  $\begin{array}{l}\text{Simple}\text{}\text{Interest=princal×rate×time}\\ \Rightarrow \text{Simple}\text{}\text{Interest}=500\times \frac{7}{100}\times 4\\ \Rightarrow \text{Simple}\text{}\text{Interest}=5\times 7\times 4\\ \Rightarrow \text{Simple}\text{}\text{Interest}=140\\ \text{and,Balance = P+S}\text{.I}\text{.}\\ \Rightarrow \text{Balance}=500+140\\ \Rightarrow \text{Balance}=640\end{array}$

The simple interest is $\$140$ and balance is $\$540$

Conclusion:

The simple interest is $\$140$ and balance is $\$540$