Question

Lisa deposits S4000 into an account that pays simple interest at a rate of 5% per year. How much interest will she be paid in thefirst 6 years?

Answer 1

The general formula for simple interest I is;

$I\text{ }=\frac{P\times R\times T}{100}$

Where;

I = the simple interest

P = Principal (in this case the initial deposit)

R = Rate per year

T = Time in years

For the given question, we are given the following;

$\begin{gathered} \text{ P }=\text{ \ }4000 \\ R\text{ = 5\%} \\ T\text{ = 6 years} \end{gathered}$

So, substituting the given into the general formula for simple interest, we have;

$\begin{gathered} I=\frac{4000\times5\times6}{100}=\frac{120,000}{100} \\ I=\text{ \ 1,200} \end{gathered}$

Therefore, the interest she would be paid after 6 years is $1,200