Question

Henry places $1.200 in a savings account that earns 8% simple interest per year. How much does he earn after 4 years? How much does he earn after 12 years?

Answer 1

Henry places $1.200 in a savings account that earns 8% simple interest per year. How much does he earn after 4 years?



How much does he earn after 12 years?​

we know that

The simple interest formula is equal to

`A=P(1+rt)`

`A=P\mleft(1+rt\mright)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

Part a) How much does he earn after 4 years?

in this problem we have

t=4 years

P=$1,200

r=8%=8/100=0.08

substitute in the formula above

`\begin{gathered} A=1,200\cdot(1+0.08\cdot4) \\ A=\$1,584 \end{gathered}`

Part b)

How much does he earn after 12 years?​

in this problem we have

t=12 years

P=$1,200

r=8%=8/100=0.08

substitute in the formula above

`\begin{gathered} A=1,200\cdot(1+0.08\cdot12) \\ A=\$2,352 \end{gathered}`