An account earns simple interest. $600 at 5% for 2 years a. Find the interest earned. $ b. Find the balance of the account. $

Answer 1

Simple interest , I, is calculated by multiplying the principal, P, by the rate,r, by the time, t, in years:

I = P * r * t

Here, P = $600

r = 0.05 (decimal value for 5%)

t = 2 years

Part a)

The interest earned will be:

I = P * r * t

I = 600 * 0.05 * 2

I = $60

Part b)

The balance in the account will be $600 plus the interest earned or:

$600 + 60 = $660