Question

To be able to buy a new computer, Donna decides to save for 2 years. She opens a savings account with $700. The account pays simple interest at an annual rate of 6%. She doesn't make any more deposits.

Answer the following questions.
(a) How much total interest will Donna earn?
(b) What will the total amount in the account be (including interest)?

Answer 1

a) $84

b) $784

Explanation:

a) Interest = Principle × Rate as a decimal × Time in years:

I = 700 × 0.06 × 2 = 84

b) Total Amount = Principle + Interest:

A = 700 + 84