# Simple Interest

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Simple Interest
Question #1 | | | Jamie wants to earn \$500 in interest so she’ll have enough to buy a used car. She puts \$2000 into an account that earns interest. How long will she need to leave her money in the account to earn \$500 in interest? | | | | Question #2 | | | A local bank is advertising that you can double your money in eight years if you invest with them. Suppose you have \$1000 to invest. What interest rate is the bank offering? | | |

Try These | | | | | | | | | Question #1 | | | Kelly plans to put her graduation money into an account and leave it there for 4 years while she goes to college. She receives \$750 in graduation money that she puts it into an account that earns 4.25% interest. How much will be in Kelly’s account at the end of four years? | | A. \$127.50 | | B. \$754.0425 | | C. \$877.50 | | D. \$1275 | | | | | | Question #2 | | | Randy wants to move his savings account to a new bank that pays a better interest rate of 3.5% so that he can earn \$100 in interest faster than at his old bank. If he moves \$800 to the new bank, how long will it take for him to earn the \$100 in interest? | | A. 3.57 years | | B. 0.357 years | | C. 0.28 years | |

A father left a will of Rs.35 lakhs between his two daughters aged 8.5 and 16 such that they may get equal amounts when each of them reach the age of 21 years. The original amount of Rs.35 lakhs has been instructed to be invested at 10% p.a. simple interest. How much did the elder daughter get at the time of the will? (1) | Rs. 17.5 lakhs | | (2) | Rs. 21 lakhs | | (3) | Rs. 15 lakhs | | (4) | Rs. 20 lakhs |

Solution:

Let Rs.x be the amount that the elder daughter got at the time of the will. Therefore, the younger daughter got (3,500,000 - x).

The elder daughter’s money earns interest for (21 - 16) = 5 years @ 10% p.a simple interest
The younger daughter’s money earns interest for (21 - 8.5) = 12.5

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