Question

Rodger put $1,000 in a bank account that pays 5% annual simple interest. At the end of four years, how much interest has he earned and what is the balance of his account

Answer 1

Answer: He has earned $200 interest and the balance of his account is $1,200.

Explanation:

Given: Principal : P = $1,000

Simple interest rate : r = 5% = 0.05

Time: t = 4 years

Simple interest =
`Prt`

`=1000*0.05*4=200`

i.e. Simple interest = $200

Balance of account = Principal + Simple interest

= $1,000 + $200

= $1,200

Hence, he has earned $200 interest and the balance of his account is $1,200.