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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.

 Dec 15, 2018
 #1
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 Dec 15, 2018
edited by Rom  Dec 15, 2018
 #5
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why is this here?

PartialMathematician  Dec 16, 2018
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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.

 

- PM

 Dec 15, 2018
 #4
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Yes, your answer is correct.

PartialMathematician  Dec 16, 2018
 #3
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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 !!. 

 Dec 15, 2018

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