Question

Erin has $60,000 in a savings account that earns 2% annually. The interest is not compounded. How much will she have in

8 months?

Answer 1

Erin will have $60,800 in eight months.

Explanation:

Formula for solving: A = P(1 + rt)

Principal: $60,000

Rate: 2%

Time: 8 months

1. Convert r into a decimal:

2%/100 = 0.02 per year.

2. Let's put the time in years so it could be easier.

8 months ÷ 12 months ÷ year = 0.666667 years.

A = 60000(1 + (0.02 × 0.666667)) = 60,800.0004

3. Now let's round, 60,800.0004 = 60,800.

A = $60,800.00

Answer 2

Answer: The total compound interest is $804.68.