Question

Old Time Savings Bank pays 4% interest on its savings accounts. If you deposit $2,800 in the bank and leave it there: (Do not round intermediate calculations. Round your answers to 2 decimal places.)

How much interest will you earn in the first year?

Answer 1

To determine the interest earned in the first year on a $2,800 deposit at a 4% interest rate, multiply the principal by the interest rate. The calculation indicates that the interest earned in the first year is $112.

Step-by-step explanation:

The question asks how much interest will be earned in the first year on a $2,800 deposit in a savings account with a 4% interest rate. To calculate the simple interest for one year, you can use the formula: Interest = Principal × Rate × Time.

For this example, the Principal is $2,800, the Rate is 4% (or 0.04 as a decimal), and Time is 1 year. So the calculation would be as follows:

Interest = $2,800 × 0.04 × 1

After calculating this, you will find that the interest earned in the first year is $112.