Question

Heather deposits $7000 into an account that pays simple interest at a rate of 2% per year. How much interest will she be paid in the first 3 years?

Answer 1

420 dollars in 3 years

Answer 2

Answer:

year after 3 year(s).

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

Where:

P is the principal amount, $7000.00.

r is the interest rate, 2% per year, or in decimal form, 2/100=0.02.

t is the time involved, 3....year(s) time periods.

So, t is 3....year time periods.

To find the simple interest, we multiply 7000 × 0.02 × 3 to get that:

The interest is: $420.00

Usually now, the interest is added onto the principal to figure some new amount after 3 year(s),

or 7000.00 + 420.00 = 7420.00. For example:

If you borrowed the $7000.00, you would now owe $7420.00

If you loaned someone $7000.00, you would now be due $7420.00

If owned something, like a $7000.00 bond, it would be worth $7420.00 now.