Question

Rachel has been given $1000 to put into a savings account. She earns 2% simple interest

every month. Rachel hopes to buy a car in two years. Help Rachel determine whether she
will have enough money if the car will cost $1500.

Answer 1

She will not have enough. She will only have $1480.

Explanation:

The formula for simple interest is A=P(1+rt)

A=final amount

P=initial amount

r=interest rate per month

t=time in months

A=1000(1+(0.02)(24))=1480

Rachel will not have enough money after two years (24 months.)

Hope that helps!