Question

1. Retta put $100.00 in a bank account that gains 20% interest annually. How much interest will
be accumulated in 1 year? And if she makes no withdrawals, how much money will be in the
account after 1 year?

Answer 1

Answer: She will earn $20 in interest. If she makes no withdrawals FOR ANOTHER ONE YEAR, she will earn $40 in interest

Step-by-step explanation:

Answer 2

The amount of interest in one year will be $20. After one more year it will become $40.

What is simple interest?

Simple interest is calculated just on the loan's principal amount, whereas compound interest is calculated on both the principal and the cumulative interest.

It is given that Retta put $100.00 in a bank account that gains 20% interest annually.

The interest after one year will be calculated by using the simple interest formula.

SI = [ P x T x R ] / 100

SI = [ 100 x 1 x 20 ] / 100

SI = $20

Again for one year more the time will become 2. Then the simple interest will be calculated as:-

SI = [ P x T x R ] / 100

SI = [ 100 x 2 x 20 ] / 100

SI = $40

Therefore, the amount of interest in one year will be $20. After one more year it will become $40.

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