Question

Isabella deposited $2,000 in an account that pays 5% simple annual interest. After one year, how much interest in dollars and cents will her investment have paid? Record your answer and fill in the bubbles on your answer document. Be sure to use the correct place value.

Answer 1

$100

Explanation:

Simple Interest formula is given as:

A = P(1 + rt)

Where

A = Amount after t years

P = Principal = Initial Amount Invested = $2000

r = Interest rate in t years = 5%

t = time = 1 year

A = 2000(1 + (0.05 × 1)) = 2100

A = $2,100.00

The Amount after 1 year = $2100.00

The Simple Interest is calculated as

= A - P

= $2100 - $2000

= $100

Therefore, after 1 year her investment would have paid $100