Question

Laura deposits 2000 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 4 years?

Answer 1

Interest paid to Laura is $320

The final amount is $2320

Explanation:

Recall that the equation for simple interest is
`A=P(1+rt)` where
`A` is the final amount,
`P` is the principal/initial value,
`r` is the annual interest rate, and
`t` is the time in years.

`A=P(1+rt)`

`A=2000(1+0.04(4))`

`A=2000(1.16)`

`A=2320`

Therefore, if the final amount is $2320, then the interest paid to Laura is $2320 - $2000 = $320