In order to help her save money for college, Peyton's grandparents deposited $10,000 into a savings
account five years ago. Peyton has not made any withdrawals or deposits since then. The interest
rate on the savings account is 3.75% each year.
Using simple interest, how much interest has accrued in Peyton's savings account?
To calculate the interest accrued using simple interest, you will need to use the formula:
Interest = Principal * Rate * Time
In this case, the principal (initial amount deposited) is $10,000 and the rate is 3.75% (or 0.0375 in decimal form). The time is five years.
Plugging these values into the formula, we get:
Interest = $10,000 * 0.0375 * 5
Simplifying this, we get:
Interest = $1,875
Therefore, the interest accrued in Peyton's savings account is $1,875.
To calculate the interest accrued in Peyton's savings account using simple interest, we need to use the formula:
Interest = Principal (initial deposit) * Rate * Time
The principal (initial deposit) in this case is $10,000, the rate is 3.75% (or 0.0375 as a decimal), and the time is 5 years.
Plugging these values into the formula, we have:
Interest = $10,000 * 0.0375 * 5
Simplifying the calculation:
Interest = $10,000 * 0.1875
Interest = $1,875
So, the interest accrued in Peyton's savings account using simple interest is $1,875.