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:

\[ \boxed{6525} \]