I need to pass mathhh please help

Question

Laura deposits $8000 into an account that pays Simple interest at a rate of 2% per year. How much interest will she be paid in the first six years

Answer 1

Hello, Elijah,

"Simple interest" means that interest is calculated and paid once a year. The problem doesn't state that the money is put back into the same account, so that it can be "compounded," which means interest is paid on the accumulated dividend, also. Assuming the money is not put back into the account, the formula for this is:

Principal x Rate x Time = Interest

I'll use symbols to save space and time:

P*R*T = I

In your problem:

P = $8000

I = 0.02

T = 6 years

Therefore:

$8000*(0.02)*6 = $960

This is the same as taking the interest for a year {(0.02)*(8000) = $160] and adding it six times for the six years, for a total of $960.

But if the money IS put back, the equation needs to reflect the increasing balance. This is a more complex equation involving exponents. I'll assume the interest is taken out each year for this problem. If that's true, the above calculation works. If the interest is compounded, please indicate so in your post, or in a comment.

Bob