What is the formula to calculate interest on an investment? How much interest does a $407 investment earn at 6% over seven years?
The formula to calculate interest on an investment is:
I = P x r x t
Where:
I = Interest earned
P = Principal amount ($407)
r = Interest rate (6% or 0.06)
t = Time period (7 years)
Replacing the values given:
I = $407 x 0.06 x 7
I = $24.42 x 7
I = $170.94
Therefore, the $407 investment will earn $170.94 in interest over seven years at a 6% interest rate.
Explanation:
The interest earned on an investment is calculated using the formula I = P x r x t, where I is the interest earned, P is the principal amount, r is the interest rate, and t is the time period.
In this case, the principal amount is $407, the interest rate is 6% (or 0.06 as a decimal), and the time period is seven years. By substituting these values into the formula, we get:
I = $407 x 0.06 x 7
I = $24.42 x 7
I = $170.94
So, the $407 investment will earn $170.94 in interest over the seven-year period.
Summary:
Based on the given data, a $407 investment will earn $170.94 in interest at a 6% interest rate over a period of seven years. This calculation is done using the formula I = P x r x t where P is the principal amount, r is the interest rate, and t is the time period.