Question

Manuel deposits $400 into a bank account that pays simple interest at a rate of 5 percent per year. How much interest will he be paid in the first 4 years?

A. $80
B. $100
C. $160
D. $200

Answer 1

Manuel deposits $400 in an account with a 5% annual simple interest rate. Using the simple interest formula, I = P × r × t, the interest earned in 4 years is $80, which is option A.

Step-by-step explanation:

To calculate the simple interest that Manuel will be paid in the first 4 years, we'll use the simple interest formula, which is given by I = P × r × t, where I stands for interest, P is the principal amount, r is the rate of interest per year, and t is time in years. In Manuel's case, the principal amount P is $400, the rate r is 5% or 0.05 when converted to a decimal, and the time t is 4 years.

Therefore, the simple interest Manuel will receive is calculated as follows:

$400 × 0.05 × 4 = $80

The correct answer is A. $80.