Question

Riley and Louie each have $5,000 to invest. They both invest at a 2.5% simple interest rate.Part ARiley keeps her money invested for 7 years. How much interest will she earn?After those 7 years how much will her investment be worth?

Answer 1

ANSWER

I = $875

A = $5,875

EXPLANATION

Riley invested $5000 at 2.5% simple interest rate for 7 years.

We have that Simple Interest is given as:

$I=\frac{P\cdot R\cdot T}{100}$

where P = principal; R = rate; T = time

Therefore, Riley's interest after 7 years is:

$\begin{gathered} I=\frac{5000\cdot2.5\cdot7}{100} \\ I=\text{ \ 8}75 \end{gathered}$

To find how much her investment will be worth, we have to add the interest to the principal:

$\begin{gathered} A=P+I \\ A=5000+875 \\ A=\text{ \ 5,875} \end{gathered}$

That is how much it is worth.