Question

If you put $525 into a savings account that paid a simple interest rate of 6.5%, how much would be in your account after two years?

How much interest did you earn?

Answer 1

$593.25 will be available in your account after two years and they earn $68.25 of interest amount, if you put $525 into a savings account that paid a simple interest rate of 6.5%.

Explanation:

The given is,

You put $525 into a savings account

Simple interest rate of 6.5%,

2 years

Step:1

Formula to calculate the future amount with simple interest rate,

`F=P(1+(r)(t))`............................(1)

Where,

F - Future amount

P - Initial investment

r - Rate of interest

t - No.of year

From given,

`F=525(1+(0.065)(2))`

`= 525 ( 1+0.13)`

`= 525 (1.13)`

= 593.25

F = $ 593.25

Step:2

Formula to calculate the interest amount,

`I=F-P`....................................(2)

Where, I - Interest amount

F - Future amount

P - Initial amount

From the F and P values equation (2) becomes,

I = 593.25 - 525

= 68.25

I = $68.25

Result:

$593.25 will be available in your account after two years and they earn $68.25 of interest amount, if you put $525 into a savings account that paid a simple interest rate of 6.5%.