Question

Ethan has $90 in a savings account. The interest rate is 10% per year and is not compounded. How much will he have in 1 year?

Answer 1

Remember the formula for simple interest (not compunded) is:

`I=P* R* T`

Where:

• P = Initial amount

,

• R = Interest rate

,

• T = Number of periods (years in this case)

The interest for 1 year is:

`I=90*0.1*1=9`

The total amount in the acount after one year would be $99