Question

To be able to take her dream vacation, Keisha decides to save for 6 years. She opens a savings account with $700. The account pays simple interest at an annual rate of 4%. She doesn't make any more deposits.

(a)how much total interest will keisha earn?

(b) What will the total amount in the account be (including interest)?

Answer 1

Answer with step-by-step explanation:

To calculate the total interest and the total amount in the account after 6 years, we can use the formula for simple interest:

Simple Interest (I) = Principal amount (P) × Rate of interest (R) × Time period (T)

Given:

Principal amount (P) = $700

Rate of interest (R) = 4% per annum

Time period (T) = 6 years

Let's calculate:

(a) Total Interest Earned:

$I = P \times R \times T \\\\I = 700 \times 0.04 \times 6 \\\\I = 168$

(b) Total amount in the account:

Total amount = Principal + Total Interest

Total amount = $700 + $168

Total amount = $868