Question

Nathan has $40 in a savings account. The interest rate is 5% per year and is not

compounded. How much interest will he earn in 1 year?
Use the formulai = prt, where / is the interest earned, p is the principal (starting amount),
is the interest rate expressed as a decimal, and is the time in years.
Submit

Answer 1

Money with Nathan in his savings account = $40

Rate of interest per annum = 5%

We know that :

`\color{hotpink}\tt \: simple \: interest \color{plum}= (principal * rate * time)/(100)`

In this case :

Principal = $40

Rate = 5%

Time = 1 year

Simple interest he will earn in 1 year :

`=\tt (40 * 5 * 1)/(100)`

`= \tt (200)/(100)`

`\color{plum} =\tt\$ \: 2`

Amount = Principal + Interest

Amount Nathan has to pay at the end of one year :

`= \tt40 + 2`

`\color{plum} =\tt \$42`

Thus, at the end of 1 year Nathan has to pay $42.

Therefore, simple interest Nathan will earn in 1 year = $2