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:

Question

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Answer 1

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

Given:

• \( p = 2000 \) (the principal amount),
• \( r = 1.2% = 0.012 \) (the interest rate converted to a decimal),
• \( t = 10 \) (the time in years).

Now, plug the values into the formula:

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

Calculating this:

\[ I = 2000 \times 0.012 = 24 \]

Now multiply \( 24 \) by \( 10 \):

\[ I = 24 \times 10 = 240 \]

Therefore, Chloe will earn $240 in interest over 10 years.