Question

Donna dispose $500 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 5 years?

Answer 1

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

Step 01:

Data

principal = $500

rate = 4%

time = 5 years

interest = ?

Step 02:

simple interest

I = P * r * t

= $500 * 0.04 * 5 years

= $100

The answer is: