Question

Michael has $96,962 in a savings account that earns 15% annually. The interest is not compounded. How much interest will you earn in 4 years? use the formula I = PRT, where I is the interest earned, p is the principal, R is the interest rate expressed as a decimal, and T is the time in years.

Answer 1

Notice that the account gives what is called "simple interest" given by the formula:

I = P * R * T

Therefore in our case, where the Principal is $96,962

and the interest rate is 15% (which in decimal form is written as 0.15)

over a time of 4 years will give the following interest:

I = 96962 * 0.15 * 4 = $58177.20