David Has $90,000 In A Savings Account That Earns 11% Interest Per Year. The Interest Is Not Compounded. How Much Interest Will He Earn In 3 Years?Use The Formula I = P R T I = Prt I = P R T , Where:- I I I Is The Interest Earned,- P P P Is The

Introduction

In this article, we will explore the concept of simple interest and how to calculate it using the formula $i = prt$. Simple interest is a type of interest that is calculated only on the initial principal amount, without taking into account the interest that has already been earned. This type of interest is commonly used in savings accounts, certificates of deposit, and other types of investments.

Understanding the Formula

The formula for calculating simple interest is $i = prt$, where:

• $i$ is the interest earned
• $p$ is the principal amount (the initial amount of money invested)
• $r$ is the interest rate (the rate at which interest is earned)
• $t$ is the time period (the length of time the money is invested)

Calculating Interest with the Formula

Let's use the example given in the problem: David has $90,000 in a savings account that earns 11% interest per year. The interest is not compounded. We want to calculate how much interest he will earn in 3 years.

Using the formula $i = prt$, we can plug in the values as follows:

• $p$ = $90,000 (the principal amount)
• $r$ = 11% (the interest rate)
• $t$ = 3 years (the time period)

First, we need to convert the interest rate from a percentage to a decimal. To do this, we divide the percentage by 100:

• $r$ = 11% = 0.11 (as a decimal)

Now we can plug in the values into the formula:

$i = prt$ $i = 90,000 \times 0.11 \times 3$ $i = 297,000$

Calculating the Interest Earned

So, according to the formula, David will earn $297,000 in interest over 3 years. However, this is not the total amount of money he will have in his savings account. To find the total amount, we need to add the interest earned to the principal amount:

• Total amount = Principal amount + Interest earned
• Total amount = $90,000 + $297,000
• Total amount = $387,000

Conclusion

In this article, we have explored the concept of simple interest and how to calculate it using the formula $i = prt$. We have used a real-world example to demonstrate how to apply the formula and calculate the interest earned. By understanding how to calculate simple interest, you can make informed decisions about your investments and savings.

Frequently Asked Questions

• Q: What is simple interest? A: Simple interest is a type of interest that is calculated only on the initial principal amount, without taking into account the interest that has already been earned.
• Q: How do I calculate simple interest? A: You can calculate simple interest using the formula $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.
• Q: What is the difference between simple interest and compound interest? A: Simple interest is calculated only on the initial principal amount, while compound interest is calculated on both the principal amount and the interest earned.

Additional Resources

• For more information on simple interest, check out the following resources:

• Khan Academy: Simple Interest
• Investopedia: Simple Interest
• Math is Fun: Simple Interest

Calculating Simple Interest with Different Interest Rates

Let's use the same example as before, but with different interest rates. We will calculate the interest earned for the following interest rates:

• 5%
• 10%
• 15%

Using the formula $i = prt$, we can plug in the values as follows:

• $p$ = $90,000 (the principal amount)
• $t$ = 3 years (the time period)

For each interest rate, we will calculate the interest earned:

• For 5% interest rate: $i = 90,000 \times 0.05 \times 3$ $i = 13,500$
• For 10% interest rate: $i = 90,000 \times 0.10 \times 3$ $i = 27,000$
• For 15% interest rate: $i = 90,000 \times 0.15 \times 3$ $i = 40,500$

Calculating the Total Amount with Different Interest Rates

To find the total amount for each interest rate, we need to add the interest earned to the principal amount:

• For 5% interest rate: Total amount = $90,000 + $13,500 Total amount = $103,500
• For 10% interest rate: Total amount = $90,000 + $27,000 Total amount = $117,000
• For 15% interest rate: Total amount = $90,000 + $40,500 Total amount = $130,500

Conclusion

In this article, we have explored the concept of simple interest and how to calculate it using the formula $i = prt$. We have used a real-world example to demonstrate how to apply the formula and calculate the interest earned. By understanding how to calculate simple interest, you can make informed decisions about your investments and savings.

Frequently Asked Questions

• Q: What is simple interest? A: Simple interest is a type of interest that is calculated only on the initial principal amount, without taking into account the interest that has already been earned.
• Q: How do I calculate simple interest? A: You can calculate simple interest using the formula $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.
• Q: What is the difference between simple interest and compound interest? A: Simple interest is calculated only on the initial principal amount, while compound interest is calculated on both the principal amount and the interest earned.

Additional Resources

• For more information on simple interest, check out the following resources:

• Khan Academy: Simple Interest
• Investopedia: Simple Interest
• Math is Fun: Simple Interest
  Simple Interest Q&A: Frequently Asked Questions =====================================================

Introduction

In our previous article, we explored the concept of simple interest and how to calculate it using the formula $i = prt$. In this article, we will answer some of the most frequently asked questions about simple interest.

Q: What is simple interest?

A: Simple interest is a type of interest that is calculated only on the initial principal amount, without taking into account the interest that has already been earned.

Q: How do I calculate simple interest?

A: You can calculate simple interest using the formula $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.

Q: What is the difference between simple interest and compound interest?

A: Simple interest is calculated only on the initial principal amount, while compound interest is calculated on both the principal amount and the interest earned.

Q: Can I use the formula $i = prt$ to calculate compound interest?

A: No, you cannot use the formula $i = prt$ to calculate compound interest. Compound interest requires a different formula, which takes into account the interest earned on both the principal amount and the interest earned.

Q: How do I calculate the total amount of money I will have in my savings account after a certain period of time?

A: To calculate the total amount of money you will have in your savings account after a certain period of time, you need to add the interest earned to the principal amount.

Q: Can I use the formula $i = prt$ to calculate the interest earned on a loan?

A: Yes, you can use the formula $i = prt$ to calculate the interest earned on a loan. However, you need to use the formula in reverse, by dividing the interest earned by the principal amount, interest rate, and time period.

Q: What is the formula for calculating the interest earned on a loan?

A: The formula for calculating the interest earned on a loan is $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.

Q: Can I use the formula $i = prt$ to calculate the interest earned on a savings account?

A: Yes, you can use the formula $i = prt$ to calculate the interest earned on a savings account.

Q: What is the difference between a savings account and a loan?

A: A savings account is a type of account where you deposit money and earn interest on it. A loan is a type of account where you borrow money and are required to pay back the principal amount plus interest.

Q: Can I use the formula $i = prt$ to calculate the interest earned on a certificate of deposit (CD)?

A: Yes, you can use the formula $i = prt$ to calculate the interest earned on a certificate of deposit (CD).

Q: What is the formula for calculating the interest earned on a CD?

A: The formula for calculating the interest earned on a CD is $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.

Conclusion

In this article, we have answered some of the most frequently asked questions about simple interest. We hope that this article has provided you with a better understanding of simple interest and how to calculate it using the formula $i = prt$.

Additional Resources

• For more information on simple interest, check out the following resources:

• Khan Academy: Simple Interest
• Investopedia: Simple Interest
• Math is Fun: Simple Interest

Calculating Simple Interest with Different Interest Rates

Let's use the same example as before, but with different interest rates. We will calculate the interest earned for the following interest rates:

• 5%
• 10%
• 15%

Using the formula $i = prt$, we can plug in the values as follows:

• $p$ = $90,000 (the principal amount)
• $t$ = 3 years (the time period)

For each interest rate, we will calculate the interest earned:

• For 5% interest rate: $i = 90,000 \times 0.05 \times 3$ $i = 13,500$
• For 10% interest rate: $i = 90,000 \times 0.10 \times 3$ $i = 27,000$
• For 15% interest rate: $i = 90,000 \times 0.15 \times 3$ $i = 40,500$

Calculating the Total Amount with Different Interest Rates

To find the total amount for each interest rate, we need to add the interest earned to the principal amount:

• For 5% interest rate: Total amount = $90,000 + $13,500 Total amount = $103,500
• For 10% interest rate: Total amount = $90,000 + $27,000 Total amount = $117,000
• For 15% interest rate: Total amount = $90,000 + $40,500 Total amount = $130,500

Conclusion

In this article, we have explored the concept of simple interest and how to calculate it using the formula $i = prt$. We have used a real-world example to demonstrate how to apply the formula and calculate the interest earned. By understanding how to calculate simple interest, you can make informed decisions about your investments and savings.

Frequently Asked Questions

• Q: What is simple interest? A: Simple interest is a type of interest that is calculated only on the initial principal amount, without taking into account the interest that has already been earned.
• Q: How do I calculate simple interest? A: You can calculate simple interest using the formula $i = prt$, where $i$ is the interest earned, $p$ is the principal amount, $r$ is the interest rate, and $t$ is the time period.
• Q: What is the difference between simple interest and compound interest? A: Simple interest is calculated only on the initial principal amount, while compound interest is calculated on both the principal amount and the interest earned.

Additional Resources

• For more information on simple interest, check out the following resources:

• Khan Academy: Simple Interest
• Investopedia: Simple Interest
• Math is Fun: Simple Interest