How much interest is earned in 2 years on $13,006 invested at an interest rate of 5% per year?

Question

Please help me with this questions.

Answer 1

Hello, thank you for taking the time to post your question!

The way this question is set up it wants you to use the simple interest formula in order to solve for the interest amount. That means taking

Interest = Principal x rate x time

For this question that is

Interest = 13006 x 0.05 x 2

Interest = 1300.60

So the interest earned over these 2 years is $1,300.60

I hope that helps get you moving in the right direction! Feel free to reach out if you have any additional questions beyond that :)

Answer 2

Hello Amanda,

 

Since this problem doesn't say anything about compound interest, we can assume this is a simple interest problem. The equation for simple interest is:

 

I = Prt

 

where our interest I is the principle amount P times the rate r multiplied by time t.

 

I = 13006 * 0.05 * 2

 

I = 1300.6