Question

To be able to buy a new computer, Lisa decides to save for 5 years. She opens a savings account with $600. The account pays simple interest at an annual rate of 4%. She doesn't make any more deposits. Answer the following questions. If necessary, refer to the list of financial formulas. (a) How much total interest will Lisa earn? ${ (b) What will the total amount in the account be (including interest)? $ X​

Answer 1

Okay, here are the step-by-step solutions:

(a) To find the total interest earned:

* Lisa opened the account with $600.

* The interest rate is 4% annually.

* The account earns simple interest for 5 years.

So:

Interest rate = 4%

Principal amount = $600

Time = 5 years

Interest = (Interest rate) x (Principal amount) x (Time)

= (0.04) x ($600) x (5 years)

= $200

Therefore, the total interest earned is $200

(b) To find the total amount in the account (principal + interest):

Principal amount = $600

Interest earned = $200

Total amount = Principal amount + Interest earned

= $600 + $200

= $800

So the total amount in the account including interest is $800

Does this make sense? Let me know if you have any other questions!