Question

• Rachel has $50 in a savings account. The interest rate is 10%per year and is notcompounded. How much interest will she earn in 1 year?

Answer 1

Simple interest formula:

I = P*r*t

where I is the interest earned after t years, P is the money invested, and r is the annual rate of interest (as a decimal). Replacing with P = 50, r = 0.1 and t = 1, we get:

I = 50*0.1*1 = $5