Question

Rachel deposit $2000 in the money market account. The bank offers a simple interest rate of 1.2%. How much interest will she earn in 10 years

Answer 1

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

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

where:
- \(I\) = interest earned
- \(P\) = principal amount (initial deposit)
- \(r\) = interest rate (as a decimal)
- \(t\) = time in years

In this case:
- \(P = 2000\)
- \(r = 1.2\% = 0.012\)
- \(t = 10\)

Now, plug the values into the formula:

\[
I = 2000 \times 0.012 \times 10
\]

\[
I = 2000 \times 0.12
\]

\[
I = 240
\]

So, Rachel will earn **$240** in interest over 10 years.