Question

Edward deposited $6,500 into a savings account 5 years ago. The simple interest rate is 5%. Howmuch money did Edward earn in interest?Substitute the values into the equation.Interest=$• • yearsEdward earned $ in interest.

Answer 1

We are given the following information.

Deposited amount = $6,500

Interest rate = 2% = 0.02

Time (in years) = 5

Recall that the simple interest formula is given by

`I=P\cdot r\cdot t`

Where I is the amount of interest earned.

P is the deposited amount, r is the interest rate and t is the time in years.

Let us substitute the given values into the above formula

`\begin{gathered} I=P\cdot r\cdot t \\ I=6500\cdot0.02\cdot5\: (\text{first box)} \\ I=\$650\: (\text{second box)} \end{gathered}`

Therefore, Edward earned $620 in interest.