logo for solving-math-problems.com
leftimage for solving-math-problems.com

Algebra - Balance in Account that Pays Simple Interest











































Three years after opening an account that paid simple interest of 6.6% annually, a depositor withdrew the $2,376.00 in interest earned.

How much money was left in the account?

Comments for Algebra - Balance in Account that Pays Simple Interest

Click here to add your own comments

Dec 22, 2013
Simple Interest Calculations
by: Staff





Answer


Part I


simple annual interest

interest = P * i * n

P = initial deposit in account. No amount was listed in the problem statement, so P is an unknown.

i = 0.066 (the interest rate in decimal form: 6.6% ÷ 100 = .066)

n = 3 years


Simple Annual Interest




interest = P * 0.066 * 3

interest = 0.198P


Simple Annual Interest:  insert values in formula




---------------------------------------------------------------------

Dec 22, 2013
Simple Interest Calculations
by: Staff


---------------------------------------------------------------------



Part II


Balance left in account after withdrawing $2,376.00

Balance = initial deposit + interest earned - withdrawal

Balance = P + 0.198P - $2,376.00

Balance = 1.198P - $2,376.00


Simple Annual Interest:  insert values in formula



Simple Annual Interest:  account balance after withdrawal







---------------------------------------------------------------------

Dec 22, 2013
Simple Interest Calculations
by: Staff


---------------------------------------------------------------------



Part III


the final answer

Balance = 1.198P - $2,376.00


Simple Annual Interest Problem:  final answer





as a final note:

determine the amount of the deposit "P" which is needed to provide a total balance of $2,376.00 at the end of three years

set the balance to zero

Balance = 1.198P - $2,376.00

0 = 1.198P - $2,376.00

0 + $2,376.00 = 1.198P - $2,376.00 + $2,376.00

$2,376.00 = 1.198P - $2,376.00 + $2,376.00

$2,376.00 = 1.198P + 0

$2,376.00 = 1.198P

$2,376.00 / 1.198 = 1.198P / 1.198

$2,376.00 / 1.198 = (1.198 / 1.198) * P

$2,376.00 / 1.198 = (1) * P


$2,376.00 / 1.198 = P

$1,983.305509 = P

P ≈ $1,983.31

The depositor must initially deposit at least $1,983.31 to guarantee that $2,376.00 can be withdrawn three years after opening the account.








Thanks for writing.

Staff
www.solving-math-problems.com


Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Math Questions & Comments - 01.



Copyright © 2008-2015. All rights reserved. Solving-Math-Problems.com