Question

Joseph inherited $20,600 at the end of his sophomore year of college. He decides to purchase a Certificate of Deposit for the money. He will earn 8% simple interest over the next two years. How much money did he earn in interest?

Answer 1

Data:

Initial capital: C

Interest rate: r

Time: t

C=$20600

r=8%

t=2years

You use the next formula to calculate the interest Joseph earn after 2 years:

$\begin{gathered} I=C\cdot\frac{r}{100}\cdot t \\ I=20600\cdot(\frac{8}{100})\cdot2 \\ I=20600\cdot(0.08)\cdot2 \\ I=3296 \end{gathered}$

Then, Joseph earn $3296 in interest.