Question

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:
I
=
p
r
t
I=prt )

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.