Question

A bank offers a savings account with a yearly simple interest rate of 2%. Suppose you deposit $550 into a savings account. How much simple interest will you earn in 4 years and six months?

Answer 1

550 x 0.02 = 11

11 x 4.5 = 49.5

ANSWER: $49.5 of simple interest

Answer 2

49.5(interest)

599.5 (total amount)

Explanation:

A=P(1+rt)

A=550(1+.02*4.5)

A=550(1+.09)

A=550(1.09)

A=599.5 (total amount)

599.5-550=49.5(interest)