Question

To be able to go on a trip to South America, Jina decides to save for 3 years. She opens a savings account with $600. The account pays simple interest at an annual rate of 5%. She doesn't make any more deposits.

(a) How much total interest will Jina earn?
(b) What will the total amount in the account be including interest?

Answer 1

Jina will earn $90 in simple interest over 3 years on her initial deposit of $600 at a 5% annual rate. The total amount in the account, including the earned interest, will be $690 after 3 years.

Step-by-step explanation:

Understanding Simple Interest

To answer the student's question regarding the total interest Jina will earn and what the total amount in the account will be, including interest, we need to apply the formula for simple interest. The formula for simple interest is I = PRT, where 'I' is the interest, 'P' is the principal amount (initial amount), 'R' is the rate of interest per year, and 'T' is the time in years.

For Jina's case:

• 
  
• Principal (P) = $600
• 
  
• Rate (R) = 5% or 0.05 as a decimal
• 
  
• Time (T) = 3 years

Using the simple interest formula:

I = PRT = $600 × 0.05 × 3 = $90

(a) Total interest Jina will earn is $90.

Now to find the total amount including interest after 3 years, we add the interest to the principal amount.

Total Amount = Principal + Interest = $600 + $90 = $690

(b) Total amount in the account including interest will be $690.