Question

21 mark for review

$p + 0.014p = 507$

at the start of the year, malik opened a bank account with $p$ dollars. during that year, malik made no additional deposits or withdrawals. at the end of the year, the account earned interest and increased to $507. which of the following is the best interpretation of $0.014p$ in this context?

a the amount of interest earned

b the amount invested at the start of the year

c the total amount in the account at the end of the year

d the rate at which the investment earned interest during the year

Explanation:

• Option A: The formula for simple interest is \( I = Prt \). Here, \( P \) is the principal (initial amount), \( r = 0.014 \) (interest rate), and \( t = 1 \) year (since it's for one year). So \( 0.014P \) represents the interest earned (\( I = Prt = P\times0.014\times1 = 0.014P \)).
• Option B: The amount invested at the start of the year is \( P \), not \( 0.014P \).
• Option C: The total amount at the end of the year is \( P + 0.014P = 507 \), not \( 0.014P \).
• Option D: The interest rate is \( 0.014 \) (or 1.4%), not \( 0.014P \) (which is a dollar amount, not a rate).

Answer:

A. The amount of interest earned