Question

Megan has $90,000 in a savings account that earns 12% interest per year. The interest is not compounded. How much interest will she earn in four years?

Answer 1

To calculate the interest Megan will earn in four years on her savings account, we can use the simple interest formula:

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

Where:
- Principal = $90,000
- Rate = 12% (expressed as a decimal, this is 0.12)
- Time = 4 years

Now, substituting the values into the formula:

\[
\text{Interest} = 90,000 \times 0.12 \times 4
\]

Calculating this step-by-step:

1. Calculate the rate multiplied by time:
\[
0.12 \times 4 = 0.48
\]

2. Multiply the principal by this result:
\[
\text{Interest} = 90,000 \times 0.48 = 43,200
\]

Thus, Megan will earn **$43,200** in interest in four years.