Question

Amy deposits S500 into an account that pays simple interest at a rate of 5% per year. How much Interest will she be paid in the first 4 years?

Answer 1

She will be paid $100 in interest in the first 4 years.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

Amy deposits $500 into an account that pays simple interest at a rate of 5% per year.

This means that
`P = 500, I = 0.05`

How much Interest will she be paid in the first 4 years?

This is E when
`t = 4`. So

`E = P*I*t = 500*0.05*4 = 100`

She will be paid $100 in interest in the first 4 years.