Question

If the principle is $4,000 and the rate of interest is 8% (simple interest), what is the amount of interest after one year?

Answer 1

Answer: $320

Explanation:

A principal of $4,000 was invested.

The principal increases at a rate of 8% every year by simple interest.

After 1 year the total in the account can be calculated by the formula:

= Principal * ( 1 + rate * time)

= 4,000 * ( 1 + 8% * 1)

= $4,320

Interest:

= Amount after a year - original price

= 4,320 - 4,000

= $320