Questions: Lamar deposits 7000 into an account that pays simple interest at an annual rate of 3%. He does not make any more deposits. He makes no withdrawals until the end of 2 years when he withdraws all the money. Answer the following questions. If necessary, refer to the underline list of financial formulas. (a) How much total interest will Lamar earn? 420 (b) What will the total amount in the account be (including interest)? 7420

Solution Steps

Using the formula for simple interest, $I = P \times r \times t$, where:

• $P$ is the principal ($7000$),
• $r$ is the annual interest rate (expressed as a decimal, 0.03), and
• $t$ is the time in years ($2$). We calculate the total interest earned as $I = 7000 \times 0.03 \times 2 = 420$.

The final amount in the account, including interest, is calculated using the formula $A = P + I$, where:

• $A$ is the final amount,
• $P$ is the principal ($7000$), and
• $I$ is the total interest earned ($420$). Therefore, the final amount in the account is $A = 7000 + 420 = 7420$.

Final Answer: