Question

When Marty was born, his parents deposited $5000 in a college savings account that un simple interest at a rate of 7.25% per year how much interest will the money have earned after 18 years?

Answer 1

To calculate the simple interest earned over a specific period, you can use the formula:

\[
I = P \times r \times t
\]

where:
- \( I \) is the interest earned,
- \( P \) is the principal amount (initial deposit),
- \( r \) is the annual interest rate (in decimal form),
- \( t \) is the time in years.

For this problem:
- \( P = 5000 \)
- \( r = 7.25\% = 0.0725 \)
- \( t = 18 \) years

Now, plug in the values:

\[
I = 5000 \times 0.0725 \times 18
\]

Calculating this step by step:

1. Calculate \( 0.0725 \times 18 \):
\[
0.0725 \times 18 = 1.305
\]

2. Now, multiply by the principal:
\[
I = 5000 \times 1.305 = 6525
\]

Thus, the total interest earned after 18 years is:

\[
\boxed{6525}
\]