Question

Suzette deposited $800 into a bank account earning simple interest of 2.5% each year. After 5 years, how much interest had her account earned?

Answer 1

`\boxed {\boxed {\sf \$ 100.00}}`

Explanation:

The formula for simple interest is

`I=prt`

where p is the principal, r is the rate, and t is the time.

The principal, or initial amount is $800 and the time is 5 years The interest rate is 2.5%, but we must convert to a decimal.

Divide by 100 or move the decimal place two spots to the left.

• 2.5/100=0.025 or 2.5 ⇒ 0.25 ⇒ 0.025

Substitute the known values into the formula.

`p= 800 \\r= 0.025 \\t= 5`

`I= (800)(0.025)(5)`

Multiply.

`I=20(5)\\I=100`

After 5 years, Suzette's account has earned $100.00