Question

Alex deposited $\$450$ into a savings account earning $3.75\%$ simple interest. How much interest will she earn in $6$ years?

Answer 1

Hint: The amount of money deposited initially by Alex into her savings account is the principle amount, which according to the above question is given to be equal to $\$450$. The interest rate earned by Alex is given to be equal to $3.75\%$. And we have been asked to evaluate the interest earned by her in $6$ years, which means that the time is given to be equal to $6$ years. The simple interest is calculated by the formula given by $I=\dfrac{P\times R\times t}{100}$ where $P$ is the principle amount, $R$ is the interest rate, and $t$ is the time for which the simple interest is to be evaluated. Therefore, on substituting $P=\$450$, $R=3.75$ and $t=6$ into the simple interest formula, we will get the required interest earned by Alex.

Complete step-by-step answer:
According to the w=question, the amount of money deposited by Alex into her savings account is given to be equal to $\$450$. This means that the principal amount is equal to $\$450$, which means that we can write
$\Rightarrow P=\$450.........\left(i\right)$
Now, the rate at which the interest is earned by him is given to be equal to $3.75\%$, which means that we can write
$\Rightarrow R=3.75........\left( ii \right)$
And according to the question, the time for which the interest is to be calculated is given to be equal to $6$ years, which means that we can write
$\Rightarrow t=6.........\left( iii \right)$
Now, we know that the simple interest is given by the formula
$\Rightarrow I=\dfrac{P\times R\times t}{100}$
Substituting the equations (i), (ii) and (iii) into the above formula we get
\[\Rightarrow I=\dfrac{450\times 3.75\times 6}{100}\]
On solving, we finally get
$\Rightarrow I=\$101.25$
Hence, the interest earned by Alex in six years is equal to $\$101.25$.

Note:Do not forget $100$ written in the denominator in the formula for the simple interest which is given as $I=\dfrac{P\times R\times t}{100}$. Since $100$ is already present in the denominator, we have to drop the percentage sign from the value of the interest rate. Also, do not forget the unit dollar while writing the final value of the simple interest evaluated.