Interest Calculations

There's a crucial tool in the study of differential equations that originated in the study of interest calculations in the middle ages. Let's take a look at the following exercise.

Exercise 12.01: Calculating Interest

A savings account pays 2% annual interest. If $3,500 is invested, how much money is in the account after 5 years?

The formula for simple interest is as follows:

Figure 12.4: Formula for simple interest

Here, I is the interest, P is the principal or the original amount invested, r is the rate of interest or growth, and t is the time the amount has been invested for. By this formula, the interest earned on the amount is I = (3500)(0.02)(5) = $350. Follow these steps to complete this exercise:

1. This is a good opportunity to start a program that will take in an initial amount, interest rate, and time and output the interest earned using the preceding formula:

   def amount(p0,rate,t):
      ...