A high school student deposits their summer job earnings of $800 into a simple interest savings plan with a 15 rate. How much will the student have earned after 4 years?

1 answer

To calculate the interest earned on a simple interest savings plan, you can use the formula:

\[ \text{Interest} = P \times r \times t \]

where:

  • \( P \) is the principal amount (initial deposit),
  • \( r \) is the annual interest rate (in decimal form),
  • \( t \) is the time in years.

In this case:

  • \( P = 800 \) (the initial deposit),
  • \( r = 15% = 0.15 \) (converting the percentage to decimal),
  • \( t = 4 \) (the number of years).

Now, substitute the values into the formula:

\[ \text{Interest} = 800 \times 0.15 \times 4 \]

Calculating it step by step:

  1. Calculate \( 800 \times 0.15 \): \[ 800 \times 0.15 = 120 \]

  2. Now multiply by \( 4 \): \[ 120 \times 4 = 480 \]

So the total interest earned after 4 years is \( 480 \).

To find out how much the student will have in total after 4 years, we add the interest to the principal:

\[ \text{Total Amount} = P + \text{Interest} = 800 + 480 = 1280 \]

Thus, the student will earn a total of $480 in interest and have $1280 in the account after 4 years.