Precalculus (6th Edition)

Published by Pearson
ISBN 10: 013421742X
ISBN 13: 978-0-13421-742-0

Chapter 1 - Equations and Inequalities - 1.2 Applications and Modeling with Linear Equations - 1.2 Exercises: 3

Answer

The person's $\$500$ will earn an interest of $\$40$ at the end of four years.

Work Step by Step

The formula for simple interest $I$ is: $I=Prt$ where $P$ = principal amount invested $r$ = interest rate per year $t$ = time in years The given situation has: $P$=$\$500$ $r=2\%=0.02$ $t=4$ years Use the formula above to obtain: $I=Prt \\I=\$500(0.02)(4) \\I=\$40$
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