Question

Trevor has $100,000 in a savings account that earns 4% interest per year. The interest is not compounded. How much will he have in total in 4 years?

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

We use simple interest: i = prt = 100000(0.04)(4) = 100000(0.16) = 16,000.

Total = principal + interest = 100,000 + 16,000 = $116,000.