Calculating Interest for a Specified Number of Years

Oct 13, 2025 by windailys.com 1 views

Introduction

Simple interest is a type of interest calculated only on the initial principal amount, without taking into account the interest that has accrued over time. In this article, we will explore how to calculate simple interest and apply it to a real-world scenario. We will use the example of Micah depositing $\$2700$ into a savings account with an annual simple interest rate of $0.3\%$ to find the amount of interest earned after each specified number of years.

What is Simple Interest?

Simple interest is calculated using the formula:

I = P \times r \times t

Where:

$I$ is the interest earned
$P$ is the principal amount (initial deposit)
$r$ is the annual interest rate (in decimal form)
$t$ is the time period (in years)

Calculating Interest for a Specified Number of Years

Now that we have a basic understanding of simple interest, let's apply it to Micah's savings account. We will calculate the interest earned after each specified number of years.

A. After $\frac{1}{2}$ year

To calculate the interest earned after $\frac{1}{2}$ year, we will use the formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = \frac{1}{2}$ year

Plugging in the values, we get:

I = \$2700 \times 0.003 \times \frac{1}{2}

I = \$2700 \times 0.0015

I = \$4.05

So, after $\frac{1}{2}$ year, Micah will have earned $\$4.05$ in interest.

B. After 1 year

To calculate the interest earned after 1 year, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 1$ year

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 1

I = \$2700 \times 0.003

I = \$8.10

So, after 1 year, Micah will have earned $\$8.10$ in interest.

C. After 2 years

To calculate the interest earned after 2 years, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 2$ years

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 2

I = \$2700 \times 0.006

I = \$16.20

So, after 2 years, Micah will have earned $\$16.20$ in interest.

D. After 5 years

To calculate the interest earned after 5 years, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 5$ years

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 5

I = \$2700 \times 0.015

I = \$40.50

So, after 5 years, Micah will have earned $\$40.50$ in interest.

Conclusion

In this article, we have explored the concept of simple interest and applied it to a real-world scenario. We have calculated the interest earned in Micah's savings account after each specified number of years. The results show that the interest earned increases as the time period increases. This demonstrates the importance of understanding simple interest and its application in real-world scenarios.

References

[1] Khan Academy. (n.d.). Simple Interest. Retrieved from https://www.khanacademy.org/math/algebra2/x2p1-3-1/x2p1-3-1-1-algebra2
[2] Investopedia. (n.d.). Simple Interest. Retrieved from https://www.investopedia.com/terms/s/simpleinterest.asp

Additional Resources

Introduction

In our previous article, we explored the concept of simple interest and applied it to Micah's savings account. We calculated the interest earned in Micah's savings account after each specified number of years. In this article, we will answer some frequently asked questions related to Micah's savings account and simple interest.

Q&A

Q: What is simple interest?

A: Simple interest is a type of interest calculated only on the initial principal amount, without taking into account the interest that has accrued over time.

Q: How is simple interest calculated?

A: Simple interest is calculated using the formula:

I = P \times r \times t

Where:

$I$ is the interest earned
$P$ is the principal amount (initial deposit)
$r$ is the annual interest rate (in decimal form)
$t$ is the time period (in years)

Q: What is the annual interest rate for Micah's savings account?

A: The annual interest rate for Micah's savings account is $0.3\%$ .

Q: How much interest will Micah earn after $\frac{1}{2}$ year?

A: To calculate the interest earned after $\frac{1}{2}$ year, we will use the formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = \frac{1}{2}$ year

Plugging in the values, we get:

I = \$2700 \times 0.003 \times \frac{1}{2}

I = \$2700 \times 0.0015

I = \$4.05

So, after $\frac{1}{2}$ year, Micah will have earned $\$4.05$ in interest.

Q: How much interest will Micah earn after 1 year?

A: To calculate the interest earned after 1 year, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 1$ year

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 1

I = \$2700 \times 0.003

I = \$8.10

So, after 1 year, Micah will have earned $\$8.10$ in interest.

Q: How much interest will Micah earn after 2 years?

A: To calculate the interest earned after 2 years, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 2$ years

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 2

I = \$2700 \times 0.006

I = \$16.20

So, after 2 years, Micah will have earned $\$16.20$ in interest.

Q: How much interest will Micah earn after 5 years?

A: To calculate the interest earned after 5 years, we will use the same formula:

I = P \times r \times t

Where:

$P = \$2700$
$r = 0.3\% = 0.003$
$t = 5$ years

Plugging in the values, we get:

I = \$2700 \times 0.003 \times 5

I = \$2700 \times 0.015

I = \$40.50

So, after 5 years, Micah will have earned $\$40.50$ in interest.

Conclusion

In this article, we have answered some frequently asked questions related to Micah's savings account and simple interest. We have also provided examples of how to calculate simple interest using the formula:

I = P \times r \times t

Where:

$I$ is the interest earned
$P$ is the principal amount (initial deposit)
$r$ is the annual interest rate (in decimal form)
$t$ is the time period (in years)

We hope this article has been helpful in understanding simple interest and its application in real-world scenarios.

References

[1] Khan Academy. (n.d.). Simple Interest. Retrieved from https://www.khanacademy.org/math/algebra2/x2p1-3-1/x2p1-3-1-1-algebra2
[2] Investopedia. (n.d.). Simple Interest. Retrieved from https://www.investopedia.com/terms/s/simpleinterest.asp