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Simple Annual Interest

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Simple Annual Interest

by raleigh » Sun Jul 05, 2009 12:03 pm
If $10,000 is invested at x simple percent annual interest for n years, which of the following represents the total amount of interest, in dollars, that will be earned by this investment in n years?

A. (10,000x^n)
B. 10,000(x/100)^n
C. 10,000n(x/100)
D. 10,000(1 + x/100)^n
E. 10,000n(1+x/100)

OA:C
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by DanaJ » Sun Jul 05, 2009 12:19 pm
"Simple interest" means that you're earning x percent for each year of the investment. Say x = 15: in this case, you'd earn 10000*15% = 10000*(15/100) per year.
x percent of $10000 will be 10000*(x/100). Since the investment is made for n years, then the total will be n*10000*(x/100) = 10000n(x/100).
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by raleigh » Sun Jul 05, 2009 1:32 pm
Obviously, the interest from the first year is 10,000(x/100).

However, at the end of the first year, you have 10,000(1+x/100). You'll have 10,000(1+x/100)(x/100) interest from the second year.

I think my problem is that is actually compound interest, not simple interest. I must have just overlooked the fact that the problem states that the interest is simple.
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Re: Simple Annual Interest

by shahdevine » Fri Aug 14, 2009 7:10 am
raleigh wrote:If $10,000 is invested at x simple percent annual interest for n years, which of the following represents the total amount of interest, in dollars, that will be earned by this investment in n years?

A. (10,000x^n)
B. 10,000(x/100)^n
C. 10,000n(x/100)
D. 10,000(1 + x/100)^n
E. 10,000n(1+x/100)

OA:C
SI=Principal x rate x time
=10000(x/100)n

C
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