Simple Interest
When an investment is placed in a savings account, it earns interest over time. The interest earned can be calculated as follows:
I = p*r*t
Where:
I=Interest earned
p=principal, or initial amount of money invested
r=interest rate, usually in yearly %
t=time, duration of the investment.
Tori invested p=$66,500 in a savings account that earns a rate of r=6% interest per year. The rate must be converted to decimal dividing by 100.
r=6/100=0.06
The investment lasts for t=4 years
Now calculate the interest:
I = 66,500*0.06*4
Calculating:
I = $15,960
Tori will earn $15,960 interest in 4 years