Question

I need help finding the answer to this:

Nathan opens a new savings account and makes an initial deposit of $400. If the account earns 2% annual interest, how much interest will he earn in 9 months?

Answer 1

He will earn $6 in interest in 9 months.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

`T = E + P`

Initial deposit of $400.

This means that
`P = 400`

2% annual interest

This means that
`I = 0.02`

How much interest will he earn in 9 months?

An year has 12 months, this means that
`t = (9)/(12) = (3)/(4) = 0.75`

This is E. So

`E = P*I*t = 400*0.02*0.75 = 6`

He will earn $6 in interest in 9 months.