Percentage math problem

Question

Deshaun deposits $300 into an account that pays simple interest at a rate of 4% per year. How much interest will he be paid in the first 4 years?

Answer 1

The value, A, of a simple interest investment initially worth A₀, earning p% interest annually over t years, may be calculated with

A = A₀(1 + p/100)^t

For this problem, simply substitute in the given quantities to find value of the account after 4 years. Then subtract the initial value from it, and you'll have the total interest earned over the four-year period.

A = 300(1 + 4/100)⁴ = 300(1.04)⁴ = 350.96

Total interest = A - A₀ = 350.96 - 300 = 50.96