Question

Sally deposited money into a savings account paying 4% simple interest per year. The first year, she earned $75 in interest. How much interest will she earn during the following year? Show your work and explain your reasoning in the space provided below.

Answer 1

The interest earned the following year = $75

Explanation:

Interest = $75

Rate = 4%

Time = 1 year

To find the Principal, Using the formula for Simple Interest :

`\text{Simple Interest = }(Principal* Rate* Time)/(100)\\\\\implies 75=(Principal* 4* 1)/(100) \\\\\bf\implies Principal = \$1875`

Now, to find amount of interest for the second year :

T = 2 years

t = 1 year

Principal = $1875

Rate = 4%

`\text{Simple Interest = }(Principal* Rate* (T-t))/(100)\\\\\implies\text{Simple Interest = }(1875* 4* (2-1))/(100)\\\\\bf\implies\textbf{Simple Interest  = }\$75`

Hence, The interest earned the following year = $75