Question

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Mrs. Rush puts in $300 in a bank account that earns 5%. How much interest will it have earned after 10 years?

Answer 1

$150

Explanation:

Let the account earns 5% APR as simple interest for the invested principal.

Now, the formula of simple interest gives that,

`A = P(1 + (rt)/(100))`, where A is the final amount, P is the principal amount invested, r is the % of interest and t is the number of years for which the principal is invested.

So, the interest earned will be given by,
`I = P * (rt)/(100)`

Hence, in our case, $300 is invested for 10 years at a simple interest of 5%. So,
`I = 300* (5 * 10)/(100) = 150` dollars.

Therefore, the amount of interest earned will be $150. (Answer)