During her first year of college, Sara put $2000 in the bank to save for a trip to Italy after graduation. The money earned 3% simple annual interest. After 4 years, how much money did she have in the bank for her trip?
2000(1 + 0.03*4) = ____
To find out how much money Sara had in the bank after 4 years, we need to calculate the interest earned on her initial deposit and add it to the principal amount.
The formula for calculating simple interest is:
Interest = Principal * Rate * Time
Where:
Principal = $2000 (initial deposit)
Rate = 3% or 0.03 (3% expressed as a decimal)
Time = 4 years
First, calculate the interest earned:
Interest = $2000 * 0.03 * 4 = $240
Next, add the interest to the initial deposit to find the total amount of money Sara had in the bank after 4 years:
Total amount = Principal + Interest = $2000 + $240 = $2240
Therefore, Sara had $2240 in the bank for her trip to Italy after 4 years.