Question

An account earns simple annual interest. You deposit $600 into an account at 5% interest rate for 2 years. (a) Find the interest earned. (b) Find the balance of the account. *

Answer 1

(a) $60 | (b) $660

Explanation:

We can use the simple interest formula for this:

`I=Prt`

I = interest amount

P = principal amount

r = interest rate (decimal form)

t = time (years)

First, change 5% into its decimal form:

5% ->
`(5)/(100)` -> 0.05

Next, plug in the values into the equation:

`I=600(0.05)(2)`

`I=60`

The interest earned is $60. To find the total balance, just add the $600 back.

`600+60=660`

The total interest earned is $60 and the total is $660.