You deposited $1200 in a savings account that earns a simple interest rate of 1.8% per year. You want to keep the money in the account for 11 years. How much interest will you earn?

Answer 1

The simple interest formula is I= Prt, where P is the initial principal amount, r is the annual interest rate (converted to decimal) and t is the time in years.

According to the word problem, P=$1,200 , r= 0.018 (percentage written as a decimal) and t=11**.

We have everything we need to substitute on the right side of the equation.

I= 1,200* 0.018*11

I= $237.60

**Note if t is given in months or days, then it must be converted to years.

Answer 2

The formula for simple interest is A = P ( 1 + r * t).

A is the final amount

P is the initial amount (principal)

r is the rate (annual)

t is the time (years)

Given your problem let's dissect the information provided.

$1200 is the initial deposit so that will be substituted for P

Your annual rate of interest is 1.8% however as a numerical value for a calculator you would have to convert the percentage into a decimal by moving the decimal point two value places to the left resulting in 0.018 which will be substitute for r

11 years is the amount of time in years that you want to let this balance grow with disruption of which we will substitute for t

Substituting these values provides: A = $1200.00 (1 + 0.018 * 11)

By order of operations we reach: A = $1200.00 (1 + 0.198) = $1200.00 (1.198) = $1437.60

Thus after 11 years this bank account will have $1437.60.

However the question being asked was the amount of interest earned, not how much money will be in the account after 11 years. To solve this we will subtract how much amount is in the account after 11 years from the initial deposit made into the account. $1437.60 - $1200.00 = $237.60.

Answer 3

Using simple interest of 1.8% and no monthly or regular contributions, after 11 years your accumulated interest amount would be $260.18. The thing to remember here is that after each year you have a new higher balance that the 1.8% will apply to. Your overall balance will go from $1200 to $1460.18. Hope this helps and thank you!