Question

$2,380 is deposited into an account that earns 4% simple interest for 5 years. How much interest is earned? What will be the account balance after 5 years?

Answer 1

The simple interest earned on a $2,380 deposit at a 4% rate over 5 years is $475, hence the account balance after 5 years will be $2,855.

Step-by-step explanation:

To calculate the simple interest earned on a deposit, you can use the formula Interest = Principal × Rate × Time. In this case, the principal is $2,380, the rate is 4% (or 0.04 as a decimal), and the time is 5 years.

Using the formula, the interest earned over 5 years would be $2,380 × 0.04 × 5. Let's compute this:

Interest = $2,380 × 0.04 × 5 = $95 × 5 = $475

The simple interest earned over 5 years is $475.

To find the account balance after 5 years, add the interest earned to the original principal:

Account Balance = Principal + Interest = $2,380 + $475 = $2,855.

After 5 years, the account balance will be $2,855.