Maya decides to save for 2 years. She opens a savings account with $400 . The account pays simple interest at an annual rate of 3%. She doesn't make any more deposits.

Question

1.) how do I find the total interest maya will earn?

2.) what will the total amount in the account be including interest

Answer 1

1) The amount of interest at the end of year 1 will be .03 x $400 = $12 giving her a total of $412

2) The amount of interest at the end of year 2 will be .03 x $412 = 12.36 giving her a total of $424.36

So she earns a total of $12 + $12.36 = $24.36 in interest