Question

Mary deposits $400 into an account that pays simple interest at a rate of 2% per year. How much interest will she be paid in the first 2 years?

Answer 1

Mary paid interest $16 in the first 2 years.

Step-by-step explanation:

As per given question we have provided that :

• ➠ Principal = $400
• ➠ Time = 2 years
• ➠ Rate = 2% per annum

Here's the required formula to find the Principal :

`{\longrightarrow{\pmb{\tt{I= (PRT)/(100)}}}}`

• ↝ I = Interest
• ↝ P = Principal
• ↝ R = Rate
• ↝ T = Time

Substituting all the given values in the formula to find the Principal :

`{\longmapsto{\sf{Interest= (PRT)/(100)}}}`

`{\longmapsto{\sf{Interest= (P * R * T)/(100)}}}`

`{\longmapsto{\sf{Interest= (400 * 2 * 2)/(100)}}}`

`{\longmapsto{\sf{Interest= \frac{4 \cancel{00} * 2 * 2}{1 \cancel{00}}}}}`

`{\longmapsto{\sf{Interest= 4 * 2 * 2}}}`

`{\longmapsto{\sf{Interest= 8 * 2}}}`

`{\longmapsto{\sf{Interest = \$16}}}`

`\star{\underline{\boxed{\sf{\purple{Interest = \$16}}}}}`

Hence, the interest is $16.

`\rule{300}{2.5}`

Answer 2

$16

Explanation:

Simple interest is based on the principal amount of a loan or deposit, whereas compound interest is based on the principal amount and the interest that accumulates on it in every period.

Simple Interest = P x r x n

where P = Principal amount, r = Annual interest rate, n = Term of loan, in years​

2% = 2 ÷ 100 = 0.02 so r = 0.02

Therefore,

Simple Interest = 400 x 0.02 x 2 = 16

So she will be paid $16 in the first two years.