Question

A $1,000 deposit for 20 years earns simple interest of 4%, how much interest has the account earned? *

Answer 1

$800

Explanation:

You are going to want to use the simple interest formula for this. The one below is modified for solving the interest earned:

`I = Prt`

I = interest amount

P = principal amount

r = interest rate (decimal form)

t = time (years)

First, change 4% into its decimal form:

4% ->
`(4)/(100)` -> 0.04

Now, lets plug in the values into the equation:

`I=1,000(0.04)(20)`

`I=800`

The interest earned after 20 years is $800