Question

Kim's bank gives your 9% simple interest on her college savings account. Ifshe deposits $700 and leaves it in the account for 6 years, howmuch interest will it earn?

Answer 1

Kodex, this is the solution:

Principal = $ 700

Interest rate = 9% = 0.09

Term = 6 years

Let's calculate the interest, using the simple interest formula, as follows:

Interest = Principal * (Interest rate * Term)

Replacing by the values given to us, we have:

Interest = 700 * (0.09 * 6)

Interest = 700 * 0.54

Interest = 378

After 6 years, Kim will earn $ 378 of interest.