Chloe deposits $2,000 in a money market account. The bank offers a simple interest rate of 1.2%. How much interest will she earn in 10 years? (Simple interest formula: 𝐼 = 𝑝 𝑟 𝑡 I=prt )

Answer 1

To calculate the interest earned using the simple interest formula \( I = p \times r \times t \), where:

• \( I \) is the interest earned,
• \( p \) is the principal amount (initial deposit),
• \( r \) is the interest rate (as a decimal),
• \( t \) is the time in years.

In this case, we have:

• \( p = 2000 \) (the initial deposit),
• \( r = 1.2% = 0.012 \) (the interest rate as a decimal),
• \( t = 10 \) (the time in years).

Now, plug in the values:

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

Now, calculate it step-by-step:

1. Calculate \( 0.012 \times 10 = 0.12 \).
2. Then, multiply that by \( 2000 \):

\[ I = 2000 \times 0.12 = 240 \]

So, the interest Chloe will earn in 10 years is $240.