Question

Sam invests $6000 in an account that pays interest of 4.5% per year.

a) How much interest would he earn each year?
b) How much would he have in his account at the end of the first year?​

Answer 1

He would earn an interest of $270 each year and at the end of the first year he would have $6270 in his account.

Explanation:

• Step 1: Given details are Principal Amount (P) = $6000, Rate of Interest (R) = 4.5% and time (T) = 1 year

• Step 2: Calculate simple interest by using the formula SI = PRT/100

⇒ SI = 6000 × 4.5 × 1/100

⇒ SI = 60 × 4.5 = $270

• Step 3: Calculate the amount he would receive at the end of an year by using the formula, A = P + SI

⇒ A = 6000 + 270

⇒ A = $6270