$40 is deposited into a credit union that offers a 10% simple interest rate per year for 15 years. How much interest will be earned during any one of the years the money is deposited?

Question

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Answer 1

To calculate the interest earned in one year on a simple interest basis, 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.

Given:

• \(P = 40\) (the principal amount),
• \(r = 10% = 0.10\) (the interest rate),
• \(t = 1\) (for one year).

Now, let's plug in the values:

\[ I = 40 \times 0.10 \times 1 \]

Calculating that:

\[ I = 40 \times 0.10 = 4 \]

So, the interest earned during any one of the years the money is deposited is \($4\).