Question

Arisia puts $500 into a savings account with an annual simple interest rate of 4.5%. If the savings account pays 5% simple interest, how much interest will Arisia earn on her $500 principal over 20 years?

Answer 1

$500

Explanation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year,

then, solving our equation

I = 500 × 0.05 × 20 = 500

I = $ 500.00

The simple interest accumulated

on a principal of $ 500.00

at a rate of 5% per year

for 20 years is $ 500.00.