An account has a principal of $500 and a simple interest rate of 4.2%. The table shows the simple interest earned and the new account balance for 1, 2, and 3 years. Complete the table for the fourth year. WHAT IS THE ANWSER I THOUGHT IT WAS 84.00 AND 584.00 IN A TABLE TELL ME IF IM RIGHT.
The formula for loans is \(x\cdot (1+r)^y\).
x represents the initial loan amount. In this example, x = $500.
r represents the interest rate, whether it is simple or compound (for compound, there is a slightly different formula). in this example, r = 0.042.
y represents the number of years the loan is not paid back yet. In this example, y is 1, 2, or 3.
If it is "simple interest" as he/she says in the question, then you don't use exponentiation, which automatically means "compound interest". In this case, you would simply: multiply the principal x interest rate x number of periods, or years in this case. So:
$500 x 0.042 x 4 =$84.00 simple interest earned over 4 years.
$500 + $84.00 =$584.00 principal + simple interest in year 4.
YES, YOU ARE RIGHT !!.