Question

Don invests $12,000 into an account that pays 8.25% interest. How much interest does his account earn after 4 years?

Answer 1

In this case, we'll have to carry out several steps to find the solution.

Step 01:

Data

P = $12000

r = 8.25% = 0.0825

t = 4 years

I = ?

Step 02:

Simple Interest

I = Prt

I = 12000*0.0825*4 = 3960

The answer is:

The interest earns is $3960.