Question

Shelley has $80,000 in a savings account that earns 10% annually. The interest is not compounded. How much interest will she earn in 5 years?

a) $40,000
b) $45,000
c) $50,000
d) $55,000

Answer 1

Shelley will earn $40,000 in interest over 5 years on an $80,000 savings account with an annual interest rate of 10%, when the interest is not compounded. This is calculated by multiplying the yearly interest by the number of years.

Step-by-step explanation:

The student is asking how much interest Shelley will earn on an $80,000 savings account that earns 10% annually over 5 years when the interest is not compounded. To calculate the interest earned, you multiply the principal amount by the annual interest rate and then multiply that by the number of years. In this case, $80,000 multiplied by 10% multiplied by 5 years will equal $40,000.

Here's the calculation step by step:

1. Determine the annual interest: $80,000 * 10% = $8,000 per year.
2. Calculate the total interest for 5 years: $8,000 * 5 = $40,000.

Therefore, the answer is: a) $40,000. Shelley will earn $40,000 in interest over 5 years.