A) The amount at the end of 3 years is $4960
B) Rate of interest is 8 % per annum
C) Yvonne would have had $120 more should the rate were 1% greater
Solution:
Given that,
Yvonne put $4,000 in a savings account
At the end of 3 years, the account had earned $960 in simple interest
A. how much does she have in her account at the end of 3 years
Amount = principal + simple interest earned
Amount = 4000 + 960
Amount = 4960
Thus the amount at the end of 3 years is $4960
B. at what annual simple interest rate did the account grow?
Rate of interest = ?
Simple interest is given by formula:
[tex]Simple\ interest = \frac{p \times n \times r}{100}[/tex]
Where,
p is the principal
n is the number of years
r is the rate of interest
[tex]960 = \frac{4000 \times 3 \times r}{100}\\\\960 = 120r\\\\r = \frac{960}{120}\\\\r = 8[/tex]
Thus rate of interest is 8 % per annum
c. how many more dollars would she have in her account if the interest rate were 1% greater
If the rate was 1% more, R = 8 + 1 = 9% per annum
First find the simple interest for 9 % per annum
[tex]Simple\ interest = \frac{4000 \times 3 \times 9}{100}\\\\Simple\ interest = 40 \times 3 \times 9\\\\Simple\ interest = 1080[/tex]
Thus,
amount = simple interest + principal
amount = 1080 + 4000 = 5080
Therefore,
Amount more = $5080 - $4960 = $120
She would have had $120 more should the rate were 1% greater.
