Question

Steve opens a bank account with a simple annual interest rate of 5%. After four year, how much interest will Steve earn on an initial deposit of $800?

$60
$160
$40
$140

Answer 1

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Steve will earn $160 interest after four years ⇒ 1st answer

Step-by-step explanation:

The formula of the simple interest is I = Prt, where

P is the initial deposit

r is the annual rate in decimal

t is the time of investment

∵ Steve opens a bank account with a simple annual interest rate of 5%

∴ r = 5% = 5 ÷ 100 = 0.05

∵ His initial deposit is $800

∵ He will put the money for four years

∴ t = 4

- Substitute all these values in the formula above

∵ I = 800(0.05)(4)

∴ I = 160

Steve will earn $160 interest after four years

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Answer 2

Steve will earn $160 interest after four years ⇒ 1st answer

Step-by-step explanation:

The formula of the simple interest is I = Prt, where

P is the initial deposit

r is the annual rate in decimal

t is the time of investment

∵ Steve opens a bank account with a simple annual interest rate of 5%

∴ r = 5% = 5 ÷ 100 = 0.05

∵ His initial deposit is $800

∵ He will put the money for four years

∴ t = 4

- Substitute all these values in the formula above

∵ I = 800(0.05)(4)

∴ I = 160

Steve will earn $160 interest after four years