Question

You have $10,000 to deposit in a savings account that earns simple interest a rate of 4.5% per year how much interest will be in the account after 2 years?

Answer 1

To calculate the simple interest earned on a deposit, you can use the formula:

\[
\text{Interest} = P \times r \times t
\]

where:
- \( P \) = principal amount (the initial amount of money)
- \( r \) = annual interest rate (as a decimal)
- \( t \) = time in years

In this scenario:
- \( P = 10,000 \)
- \( r = 4.5\% = 0.045 \)
- \( t = 2 \) years

Now plug in the values:

\[
\text{Interest} = 10,000 \times 0.045 \times 2
\]

Calculating that gives:

\[
\text{Interest} = 10,000 \times 0.045 \times 2 = 10,000 \times 0.09 = 900
\]

So, after 2 years, the interest in the account will be **$900**.