Question

Keisha deposits $500 into an account that pays simple interest at a rate of 2% per year. How much interest will she be paid in the first 4 years?

Answer 1

$40

Explanation:

You are going to want to use the simple interest formula for this.

`I=Prt`

I = interest amount

P = principal amount

r = interest rate (decimal form)

t = time

First, change 2% into its decimal form:

2% ->
`(2)/(100)` -> 0.02

Next, plug in the values into the equation as shown below:

`I=500(0.02)(4)`

`I=40`

Keisha earned $40 worth of interest after the first 4 years.