Question

Jenhas$40,000inasavingsaccountthatearns2%interestperyear.Theinterestisnotcompounded.Howmuchinterestwillsheearnin5years?

Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

Given i = prt with p = \$40,000, r = 2% = 0.02, t = 5:

i = 40,000 × 0.02 × 5 = 40,000 × 0.1 = \$4,000.

She will earn \$4,000 in interest in 5 years.