Question

Bill deposits $3,000 into an account that pays simple interest at a rate of 3% per year. How much interest will he be paid in the first 4 years?

Answer 1

The interest he will be paid in the first 4 years is $360

Explanation:

The rule of the simple interest is I = Prt, where

• P is the initial deposit

• r is the rate in decimal

• t is the time

∵ Bill deposits $3,000 into an account

∴ P = 3000

∵ The account pays simple interest at a rate of 3% per year

∴ r = 3% = 3 ÷ 100 = 0.03

∵ The time is 4 years

∴ t = 4

→ Substitute these values in the rule above

∵ I = 3000(0.03)(4)

∴ I = 360 dollars

∴ The interest he will be paid in the first 4 years is $360