Question

Lisa deposits S4000 into an account that pays simple interest at a rate of 5% per year. How much interest will she be paid in thefirst 6 years?

Answer 1

The general formula for simple interest I is;

`I\text{ }=(P* R* T)/(100)`

Where;

I = the simple interest

P = Principal (in this case the initial deposit)

R = Rate per year

T = Time in years

For the given question, we are given the following;

`\begin{gathered} \text{ P }=\text{ \$}4000 \\ R\text{ = 5\%} \\ T\text{ = 6 years} \end{gathered}`

So, substituting the given into the general formula for simple interest, we have;

`\begin{gathered} I=(4000*5*6)/(100)=(120,000)/(100) \\ I=\text{ \$1,200} \end{gathered}`

Therefore, the interest she would be paid after 6 years is $1,200