Question

Farid has $66,256 in a savings account that earns 5% interest per year. The interest is not compounded. How much will he have in 5 years? Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), is the interest rate expressed as a decimal, and t is the time in years. Submit

Answer 1

Simple Interest

The interest earned by an investment, also called principal, depends on three variables:

p=starting amount of money or principal

r=rate of interest

t=duration of the investment

Now let's get on the question. Farid has $66,256 in a savings account. It means that p=66,256. The account earns 5% interest per year. This data is r=5% and must be converted to a decimal by dividing by 100, r=0.05.

We also know the investment has a duration of t= 5 years.

We have all the needed data to calculate the interest by using the formula.

I = p*r*t

Substituting.

I=66,256*0.05*5

Calculating:

I=16,564

The interest earned in 5 years is $16,564

The balance in the account is:

M = $66,256 + $16,564 = $82,820

Final balance: $82,820