Gia opened two savings accounts at two different banks. One account earns an annual 3.4% simple interest, and the other earns half as much.
If she deposited $500 in each account, how much total interest will she have earned in 5 years?
For the first account earning 3.4% simple interest, the interest earned after 5 years would be:
Interest = Principal x Rate x Time
Interest = $500 x 0.034 x 5
Interest = $500 x 0.17
Interest = $85
For the second account earning half the interest rate, the interest earned after 5 years would be:
Interest = Principal x (Rate/2) x Time
Interest = $500 x (0.034/2) x 5
Interest = $500 x 0.017 x 5
Interest = $500 x 0.085
Interest = $42.50
Therefore, the total interest Gia will have earned in 5 years from both accounts is:
Total Interest = $85 + $42.50
Total Interest = $127.50
Gia will have earned $127.50 in total interest after 5 years.