Question

Calculate the simple interest on $800 left in account that pays 6% annual interest for 7 years.

Answer 1

Recall the formula for interest (I) as:

I = P * R * T

where P is the principal deposited, R is the rate in decimal form, and T is the number of years for the deposit.

So we replacethe values in the formula, making sure that the rate R is written in decimal form:

6% = 0.06

so the equation for interest (I) becomes:

I = 800 * 0.06 * 7 = $336

The interest collected is: $336.