Question

2. $3,000 is deposited into a savings account that earns 4% simple interest for 3years. How much interest will be earned in the 3 years?

Answer 1

In order to calculate the simple interest generated, we can use the following formula:

$I=P\cdot i\cdot t$

Where I is the interest, P is the principal (initial amount), i is the interest rate and t is the amount of time.

Using P = 3000, i = 0.04 and t = 3, we have:

$\begin{gathered} I=3000\cdot0.04\cdot3 \\ I=360 \end{gathered}$

So the interest generated is $360.