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Identify the principal amount (P), annual interest rate (R), and time (T).

Economics

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6 steps

c) (i)

  1. Identify the principal amount (PP), annual interest rate (RR), and time (TT).

    P = \500 R = 1.7% = \frac{1.7}{100} = 0.017 T = 10$ years

  2. Use the simple interest formula I=P×R×TI = P \times R \times T.

    I=$500×0.017×10I = \$500 \times 0.017 \times 10

  3. Calculate the total interest earned.

    I=$85I = \$85 The total interest earned is \boxed{\mathbf{\85}}$.

    c) (ii)

  4. Identify the principal amount (PP), daily interest rate (rdailyr_{daily}), and the number of days (nn).

    P = \200Dailyinterestrate Daily interest rater_{daily} = 0.0035% = \frac{0.0035}{100} = 0.000035$
    Number of days in 1 year = 365

  5. Use the compound interest formula A=P(1+rdaily)nA = P(1 + r_{daily})^{n}, where nn is the number of compounding periods (days).

    A=$200(1+0.000035)365A = \$200(1 + 0.000035)^{365}

  6. Calculate the value of the investment.

    A=$200(1.000035)365A = \$200(1.000035)^{365} A≈$200×1.012869A \approx \$200 \times 1.012869 A≈$202.5738A \approx \$202.5738 The value of Ollie's investment at the end of 1 year is \boxed{\mathbf{\202.57}}$.

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