Question

Laura deposits 2000 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 4 years?

Answer 1

Answer:

Interest paid to Laura is $320

The final amount is $2320

Step-by-step explanation:

Recall that the equation for simple interest is $A=P(1+rt)$ where $A$ is the final amount, $P$ is the principal/initial value, $r$ is the annual interest rate, and $t$ is the time in years.

$A=P(1+rt)$

$A=2000(1+0.04(4))$

$A=2000(1.16)$

$A=2320$

Therefore, if the final amount is $2320, then the interest paid to Laura is $2320 - $2000 = $320