To calculate how much Alvin will have in total after 2 years, we use the simple interest formula since the interest is not compounded:

$A = P(1 + rt)$

Where:

• $A$ is the total amount after interest.
• $P$ is the principal (initial amount), which is $40,000.
• $r$ is the annual interest rate as a decimal, which is $\frac{12}{7 \times 8} = 0.2143$ or 21.43%.
• $t$ is the time in years, which is 2 years.

Step 1: Convert the percentage to a decimal

$r = 0.2143$

Step 2: Plug the values into the formula

$A = 40,000(1 + (0.2143 \times 2))$ $A = 40,000(1 + 0.4286)$ $A = 40,000(1.4286)$ $A = 57,144$

So, Alvin will have $57,144 in total after 2 years.

Would you like more details or have any questions?

Here are 5 related questions for further practice:

1. How would the amount change if the interest rate was compounded annually?
2. What would the total be if the interest rate was 10% instead?
3. How much interest will Alvin earn in 2 years at this rate?
4. What would the total amount be after 5 years with the same rate?
5. How does the simple interest formula differ from the compound interest formula?

Tip: Always double-check if the interest is simple or compounded, as it can significantly affect the final amount.