Question

Shelly deposited $8,000 into a savings

account that earns 4% simple interest.
How much interest did she earn after
three years?

Answer 1

Shelly earned $8,960 in interest.

Explanation:

The formula for simple interest is A=P(1+rt). For this problem, the equation is A=8,000(1+0.04x3). 8,000 is the initial balance, 0.04 is the annual interest rate, and 3 is the time in years. Following the order of operations, 0.04 multiplied by 3 is 0.12. 0.12 plus 1 is 1.12. 8,000 multiplied by 1.12 is 8,960.

Answer 2

£960

Explanation:

So you start of by calculating the interest for one year.

8,000 × 0.04 = 320

Because the interest rate is 4% you will write it as 0.04

And because it is simple interest, you will need to multiply 320 by 3 to get the amount of interest she will get after 3 years.

320 × 3 = 960

If you wanted the total amount of money she would have after receving the interest, you just have to add 960 to the starting amount of 8,000.

8,000 + 960 = 8,960

In this, you are assuming that she doesn't take any money out or put any money in for those 3 years.

I think that's right anyway.