Mary deposits $400 into an account that pays simple interest at a rate of 2% per year. How much interest will she be paid in the first 2 years?
To calculate the interest Mary will be paid in the first 2 years, we will use the formula for simple interest:
Interest = Principal × Rate × Time
Given:
Principal (P) = $400
Rate (R) = 2% = 0.02
Time (T) = 2 years
Plugging in the values into the formula, we get:
Interest = $400 × 0.02 × 2
Calculating the expression, we find:
Interest = $400 × 0.04
Interest = $16
Therefore, Mary will be paid $16 in interest in the first 2 years.
To find the amount of interest Mary will be paid in the first 2 years, you need to calculate the simple interest earned on her initial deposit.
The formula for calculating simple interest is:
Interest = Principal x Rate x Time
Where:
- Principal is the initial amount deposited
- Rate is the interest rate per time period
- Time is the number of time periods
In this case, Mary's principal is $400, the rate is 2% (or 0.02), and the time is 2 years.
Calculating the interest:
Interest = $400 x 0.02 x 2
Interest = $16
Therefore, Mary will be paid $16 in interest in the first 2 years.
I = PRT
= 400(.02)(2) = ....