Question

Eric deposits $6000 into an account that pays simple interest at a rate of 2% per year. How much interest will he be paid in the first 3 years?

Answer 1

To calculate the simple interest earned on an account, you can use the formula:

\( \text{Interest} = P \times r \times t \)

where:
- \( P \) is the principal amount (the initial amount of money),
- \( r \) is the annual interest rate (as a decimal),
- \( t \) is the time in years.

In this case:

- \( P = 6000 \) (the amount deposited),
- \( r = 2\% = 0.02 \) (the interest rate, converted to decimal),
- \( t = 3 \) years (the time period).

Plugging in the values:

\[
\text{Interest} = 6000 \times 0.02 \times 3
\]

Calculating it step by step:

1. Calculate \( 6000 \times 0.02 = 120 \)
2. Then multiply \( 120 \times 3 = 360 \)

Thus, the interest earned in the first 3 years is **$360**.