Question

Seth deposited $40 in a savings account that earns 5% interest each year. How much interest will he earn in 1 year?

Answer 1

$2

Explanation:

Answer 2

$2

Explanation:

The formula for simple interest is i = p*r*t, where r is the annual interest rate expressed as a decimal fraction. Here the principal is $40 and the elapsed time is 1 year. The amount of interest collectible after 1 year is thus:

i = ($40)(0.05)(1) = $2