Question

Don invests $12,000 into an account that pays 8.25% simple interest. How much interest does his account earn after 4 years?

Answer 1

$3960

Explanation:

Given parameters:

Principal = $12,000

Simple interest = 8.25%

Time = 4yrs

Unknown:

Interest earned = ?

Solution:

To solve this problem, we have to use the simple interest formula shown below:

Simple interest =
`(PRT)/(100)`

P is the principal

R is the rate

T is the time

Now insert the parameters and solve;

Simple interest =
`(12000 x 8.25 x 4)/(100)` = $3960