Question

Sophie deposited $500 and earned simple annual interest of 8%. How much money did Sophie have in her account after 2 years? $

Answer 1

We simply use the formula A = P(1 + rt) where

A is the accrued amount (the amount gained in total)

P is the principal (starting amount)

r is the interest rate

t is the time period that the money accrued.

So:

A = $500(1 + .08(2))

A = $580

After 2 years, Sophie had $580 in her bank account.