SIMPLE INTEREST
kelsie has an $800 savings bond which she has had for 2 1/2 years. The bond pays simple interest at the rate of 3.8% per year. If kelsie cashes the bond, what amount will she receive?
Oops. That was compound interest.
Simple interest pays .038*800 = 30.40 each year
SO, after 2.5 years, she has earned 2.5*30.40 = 76.00 in interest.
800 * 1.0382.5
= 800 * 1.0977
= 878.16
To find the amount that Kelsie will receive by cashing the bond, you need to calculate the simple interest earned on the bond.
Step 1: Convert 2 1/2 years to a fraction.
2 1/2 years can be written as 2 + 1/2 = 2 + 0.5 = 2.5 years.
Step 2: Calculate the simple interest using the formula: I = P * R * T
Where:
I = simple interest
P = principal amount (initial amount of the bond)
R = rate of interest
T = time in years
Here, P = $800, R = 3.8% = 0.038, and T = 2.5 years.
I = $800 * 0.038 * 2.5
I = $76
Step 3: Add the interest earned to the principal amount to get the total amount that Kelsie will receive.
Total amount = Principal amount + Interest earned
Total amount = $800 + $76
Total amount = $876
Therefore, Kelsie will receive $876 by cashing the bond.
To calculate the amount Kelsie will receive when she cashes the bond, we need to use the formula for calculating simple interest:
Simple Interest = Principal x Rate x Time
In this case, the principal amount (P) is $800, the rate (R) is 3.8%, and the time (T) is 2.5 years.
Let's calculate the interest amount first:
Interest = Principal x Rate x Time
Interest = $800 x 0.038 x 2.5
Multiply the principal amount by the interest rate to find the interest for 1 year:
Interest = $800 x 0.038 = $30.40
Now, multiply the interest amount for 1 year by the total number of years (2.5) to get the total interest:
Total Interest = $30.40 x 2.5 = $76
To find the amount Kelsie will receive, we need to add the total interest to the principal amount:
Amount Kelsie will receive = Principal + Total Interest
Amount Kelsie will receive = $800 + $76
Amount Kelsie will receive = $876
Therefore, Kelsie will receive $876 when she cashes the bond.