Question

How much interest is earned if $5800 is put into a savings account that pays 2.5% interest for four years?

Answer 1

$580

Explanation:

We have that the simple interest formula is the following:

`I=P* R* t`

Where, I is the interest money created, P is the principal starting amount of money, R is the interest rate per year and t is the time the money is invested.

Replacing, we calculate the interest earned in 4 years:

`\begin{gathered} I=5800\cdot0.025\cdot4 \\ I=\text{ \$580} \end{gathered}`

The interest earned is $580