Question

M puts $800 in a savings account at an annual interest rate of 2%. If Liam does not withdraw or deposit any money, what is the interest that Liam will earn at the end of six months?

A) $8
B) $16
C) $4
D) $2

Answer 1

Liam will earn $8 in interest at the end of six months on an $800 deposit with an annual interest rate of 2%, using the simple interest formula.

Step-by-step explanation:

To calculate the interest Liam will earn at the end of six months on an $800 deposit with an annual interest rate of 2%, you would use the formula for simple interest: Interest = Principal × Rate × Time. Since the time is in months, we convert it to a fraction of a year, in this case, six months is half a year or 0.5 years.

Interest = $800 × 0.02 × 0.5 = $8.

Therefore, the interest Liam will earn at the end of six months is $8, which corresponds to option A.

To calculate the interest, you can use the formula: Interest = Principal * Rate * Time. In this case, the principal is $800, the rate is 2% (or 0.02 as a decimal), and the time is 6 months. Therefore, the interest earned would be: $800 * 0.02 * (6/12) = $8.