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To be able to buy a new computer, kaitlin decides to save for 4 years. she opens a savings account with $500. the account pays simple interest at an annual rate of 2%. she doesn't make any more deposits. how much total interest will kaitlin earn?

Respuesta :

The total interest for 4 years with a principal amount of $500 and a rate of 2% is $40.

What is the formula for simple interest?

The formula for the simple interest is,

I = PTR

where

I is the interest, P is the principal amount, T is the period, and R is the rate of interest.

Calculation:

The given data is,

Kaitlin wants to save $500 in her savings account. I.e., P = $500

For 4 years i.e., T = 4 years and the rate R = 2%  i.e., R = 0.02

Then,

the total interest for 4 years with no more deposits is

I = PTR

 = $500 × 4 × 0.02

 = $40

Therefore, the total interest that Kaitlin will earn for 4 years is $40.

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