Maria deposits $400 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 2 years?
Question
Maria deposits $400 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 2 years?
Solution
To calculate the simple interest, you can use the formula:
Interest = Principal x Rate x Time
In this case:
- The principal, or the initial amount of money Maria deposited, is $400.
- The rate of interest is 4% per year. In decimal form, this is 0.04.
- The time is 2 years.
Substituting these values into the formula gives:
Interest = $400 x 0.04 x 2
So, the interest Maria will be paid in the first 2 years is $32.
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