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Milan deposits $4,000 into an account that pays simple interest at an annual rate of 2%. He does not make any more deposits. He makes no withdrawals until the end of 2 years when he withdraws all the money.

(a) How much total interest will Milan earn?
(b) What will the total amount in the account be (including interest)?

1 Answer

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A. Use the equation I=Prt
I=4000x 0.02 x 2
Total of $160 earned

B. 4000+160 = $4160 is the total amount after 2 years including interest
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