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If $2000 was deposited in an account with an annual simple interest rate of 4% for 5 years, how much interest was earned?

Sagot :

To determine the interest earned on a deposit over a period of time with simple interest, you can use the simple interest formula:

[tex]\[ I = P \times r \times t \][/tex]

where:
- [tex]\( P \)[/tex] is the principal amount (the initial amount of money deposited),
- [tex]\( r \)[/tex] is the annual interest rate (expressed as a decimal),
- [tex]\( t \)[/tex] is the time the money is deposited for, in years,
- [tex]\( I \)[/tex] is the interest earned.

Given the values:
- [tex]\( P = 2000 \)[/tex] (the principal amount),
- [tex]\( r = 0.04 \)[/tex] (the annual interest rate as a decimal),
- [tex]\( t = 5 \)[/tex] (the number of years),

we can substitute these values into the formula to find the interest earned.

[tex]\[ I = 2000 \times 0.04 \times 5 \][/tex]

First, multiply the principal by the interest rate:

[tex]\[ 2000 \times 0.04 = 80 \][/tex]

Next, multiply this result by the number of years:

[tex]\[ 80 \times 5 = 400 \][/tex]

Thus, the interest earned over 5 years is $400.
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