Question

#18-4: Douglas invests $550 in high-yield savings account. The account pays 2.1% simple interest annually. If he doesn't add or subtract any money, is it reasonable to expect that Douglas will earn about $100 in simple interest in 4 years?

Answer 1

Answer:

No

Step-by-step explanation:

You want to calculate the interest on $550 at 2.1% interest per year after 4 years.

The formula we'll use for this is the simple interest formula, or:

I = P x r x t

P is the principal amount, $550.00.

r is the interest rate, 2.1% per year, or in decimal form, 2.1/100=0.021.

t is the time involved, 4 years.

So, t is 4 year time periods.

To find the simple interest, we multiply 550 × 0.021 × 4 to get that:

The interest is: $46.20