Question

Suzette deposited $800 into a bank account earning simple interest of 2.5% each year. After 5 years, how much interest had her account earned?

Answer 1

Answer:

$\boxed {\boxed {\sf \ 100.00}}$

Step-by-step explanation:

The formula for simple interest is

$I=prt$

where p is the principal, r is the rate, and t is the time.

The principal, or initial amount is $800 and the time is 5 years The interest rate is 2.5%, but we must convert to a decimal.

Divide by 100 or move the decimal place two spots to the left.

• 2.5/100=0.025       or          2.5 ⇒  0.25 ⇒ 0.025

Substitute the known values into the formula.

$p= 800 \\r= 0.025 \\t= 5$

$I= (800)(0.025)(5)$

Multiply.

$I=20(5)\\I=100$

After 5 years, Suzette's account has earned $100.00