Question

Edward deposited $10,000 into a savings account 2 years ago. the simple interest rate is 2% How much money did Edward earn in interest? what would his new account balance be?​

Answer 1

Interest Earned: $400 / New Account Balance: $10,400

Explanation:

We will use the simple interest formula for this problem.

A = P (1 + rt)

P = initial balance

r = annual interest rate

t = time

We can plug in your values into the equation. Remember to convert the percent into its decimal form (2% -> .02):

A = 10,000(1 + .02 x 2) = 10,400