Finite Math and Applied Calculus (6th Edition)

Published by Brooks Cole
ISBN 10: 1133607705
ISBN 13: 978-1-13360-770-0

Chapter 2 - Section 2.1 - Simple Interest - Exercises: 1

Answer

$INT=\$120$ $FV=\$2,120$

Work Step by Step

The simple interest on an investment (or loan) of $PV$ dollars at an annual interest rate of $r$ for a period of $t$ years is $INT=PVrt$. We are given: PV=2,000, t=1 (year), r=0.06 (6%). Substitute into the formula: INT=2000(1)(0.06)=120 (dollars) The future value of an investment of $PV$ dollars at an annual simple interest rate of $r$ for a period of $t$ years is $FV=PV(1+rt)=PV+INT$ . Here, $FV=2,000+120=\$2,120$
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