Question

Tegan’s aunt deposited $4,000 into a savings account for her. The account pays 4.5% simple interest each year. If she neither adds nor withdraws money from the account, how much interest will she earn after 20 months?

Answer 1

Tegan will earn $301.20 in interest after 20 months.

Step-by-step explanation:

To calculate the amount of interest Tegan will earn after 20 months, we can use the formula:

Interest = Principal imes Rate imes Time

Here, the principal is $4,000 and the rate is 4.5%. To convert the rate to a decimal, divide it by 100: 4.5 / 100 = 0.045. The time is 20 months, which we need to convert to years by dividing it by 12: 20 / 12 = 1.67 years.

Now we can calculate the interest:

Interest = $4,000 imes 0.045 imes 1.67 = $301.20

Therefore, Tegan will earn $301.20 in interest after 20 months.