Question

Compute the amount of interest earned in the following simple interest problem. A deposit of $100 at 8% for 20 years = _____. $1.60 $16.00 $160.00 $1,600.00

Answer 1

Initial deposit = 100 dollars
Interest = 8% = 0.08
time of deposit - 20 years or 240 months.
Annual Rate :
=> 100 dollars * .08 = 8 dollars per year
=> 8 * 20 = 160 dollars for 20 years.

Answer 2

C. $160.

Explanation:

We are asked to find the amount of simple interest earned from a deposit of $100 at 8% for 20 years.

We will use simple interest formula to solve our given problem

`I=Prt`, where,

`I=\text{Amount of interest}`,

`P=\text{Principal amount}`,

`r=\text{Interest rate in decimal form}`,

`T=\text{Time in years}`.

Let us convert our given interest rate in decimal form.

`8\%=(8)/(100)=0.08`

Upon substituting our given values in above formula we will get,

`I=100*0.08*20`

`I=160`

Therefore, the amount of interest earned is $160 and option C is the correct choice.