Video Transcript
Benjamin had 820,000 dollars. He paid 250,000 dollars in taxes and
invested the rest in a savings account with a 4.95 percent simple interest. Determine the amount of money in
Benjamin’s account if he makes no deposits or withdrawals for two years.
We can calculate the amount of simple
interest accrued using the formula 𝐼 equals 𝑃 multiplied by 𝑅 multiplied by 𝑇. 𝐼 is the amount of interest that is
accrued. 𝑃 is the principal amount, in this case,
the amount that was invested. 𝑅 is the rate of interest written as a
decimal. And finally, 𝑇 is the time period. In this question, the amount invested can
be calculated by subtracting the amount of tax, 250,000, from 820,000. This is equal to 570,000. Therefore, Benjamin invested 570,000
dollars.
The rate of interest was 4.95
percent. We can convert this to a decimal by
dividing by 100. This is equal to 0.0495. As we want to calculate the amount of
money after two years, 𝑇 is equal to two. We can, therefore, calculate the amount
of simple interest by multiplying 570,000, 0.0495, and two. Typing this into the calculator gives us
56430. The amount of interest that Benjamin
accrued was 56,430 dollars. As we need to calculate the new amount of
money in Benjamin’s account, we need to add this interest to 570,000, the amount he
initially invested. 570,000 plus 56,430 is equal to
626,430. We can, therefore, conclude that, after
two years, Benjamin has 626,430 dollars.
