Question

Arisia puts $500.00 into a savings account with an annual simple interest rate of 4.5%

How much interest does she earn per year?

Answer 1

Simple interest is calculated by multiplying the principal amount (the initial deposit) by the interest rate and the number of years.

The formula for simple interest is:

I = P * r * t

Where:

I = Interest

P = Principal (initial deposit)

r = Interest rate (expressed as a decimal)

t = Time (in years)

In this case, the principal amount is $500.00, the interest rate is 4.5%, and the time is one year.

The interest rate is expressed as a percentage, so we need to convert it to a decimal by dividing it by 100:

r = 4.5/100 = 0.045

Now we can plug in the values into the formula:

I = $500.00 * 0.045 * 1 = $22.50

So, Arisia earns $22.50 in interest per year.