Question

Mr. Perkins has \$ 120$120 in a savings account. The interest rate is 5 \%5% per year and is simple interest. How much will he have in 2 years?​

Answer 1

$12

Explanation:

Simple interest calculation is

I = Prt

where P is the principal, r is the rate of interest as a decimal and t the number of years

Given

P = 120, r = 5% = 5/100 = 0.05 and t = 2 years

the simple interest

= 120 x 0.05 x 2 = $12

Answer 2

Answer: 132 dollars

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Work Shown:

i = P*r*t

i = 120*0.05*2

i = 12

Mr. Perkins earns $12 in simple interest over the two year period. His account balance will be 120+12 = 132 dollars

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Slight shortcut:

A = P*(1+r*t)

A = 120*(1+0.05*2)

A = 132