Question

Sarah has $13 in a savings account. The interest rate is 20% per year and is not compounded. How much will she have in 1 year? Use formula i=p*r*t, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

This is simple interest and the formulaa is

I = p * r * t

where i is the interest earned

p is the principal (starting amount),

r is the interest rate

From the information given,

p = 13

r = 20/100 = 0.2

t = 1

I = 13 * 0.2 * 1

I = 2.6

Therefore, the amount that she would have in 1 year is

13 + 2.6 = $15.6