Question

Paul deposits $200 into a savings account with a simple interest of 2.2% each year.

How much interest will Paul earn after 5 years?

Answer 1

Paul will earn $22.00 in interest over 5 years.

Explanation:

There are multiple forms of interest, but this specific problem is for simple interest at a rate of 2.2%

The formula for simple interest is:

I = prt

I is the Interest Earned

p is the Initial Investment

r is the Interest Rate

t is the time (years)

For this equation,

I = unknown

p = $200

r = 2.2% or .022 as a decimal

t = 5 (years)

I = (200)(.022)(5)

Using PEMDAS, first multiple (200)(.022)

I = (4.4)(5)

Again, multiply.

I = 22

So, Paul would earn $22 dollars in interest over the period of 5 years if he invested $200 into a savings account with an simple interest of 2.2% each year.

$200 + $22 = x

$222 = x

He would have then have a total of $222.