Elena has $100,000 in a savings account that earns 9 3/8% interest per year. The interest is not compounded. How much interest will she earn in 5 years?
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Question & Answer
How much interest will she earn in 5 years?
1 Answer
Verified archiveTo find out how much interest Elena will earn in 5 years, you can use the formula for simple interest:
[
text{Interest} = text{Principal} times text{Rate} times text{Time}
]
Where:
– Principal = $100,000
– Rate = 9 3/8% = 9.375% = 0.09375 (when expressed as a decimal)
– Time = 5 years
Now, plug in the values:
[
text{Interest} = 100,000 times 0.09375 times 5
]
Calculating that gives:
[
text{Interest} = 100,000 times 0.09375 times 5 = 46,875
]
So, Elena will earn $46,875 in interest over 5 years.