Questions: Diane deposits 7000 into an account that pays simple interest at a rate of 3% per year. How much interest will she be paid in the first 6 years?

Diane deposits 7000 into an account that pays simple interest at a rate of 3% per year. How much interest will she be paid in the first 6 years?

Transcript text: Diane deposits $\$ 7000$ into an account that pays simple interest at a rate of $3 \%$ per year. How much interest will she be paid in the first 6 years?

Solution

Solution Steps

To find the simple interest paid on an account, we use the formula for simple interest: $I = P \times r \times t$ , where $I$ is the interest, $P$ is the principal amount, $r$ is the rate of interest per year, and $t$ is the time in years. In this case, we need to calculate the interest for a principal of $7000 at a rate of 3% over 6 years.

Step 1: Identify the Variables

We have the following values:

Principal amount $P = 7000$
Interest rate $r = 0.03$
Time period $t = 6$

Step 2: Apply the Simple Interest Formula

The formula for simple interest is given by: $I = P \times r \times t$ Substituting the known values into the formula: $I = 7000 \times 0.03 \times 6$