SEARCH HOME
 Math Central Quandaries & Queries
 Question from Tiffany, a parent: cindy puts 5,025 in a bank account that earns a simple interest rate of 8%. How much money will be in the account at the end of 6 years?

Hi Tiffany,

Simple interest of 8% means that the amount in the account is increased by 8% of the principal each year. The interest only applies to the principal, not the interest. Thus for example if she had put $4,000 in the account then she would earn$4,000 × 0.08 = $320.00 interest each year. Hence at the end of the 6 years she would have the original$4,000 plus the interest of $320 per year for a total of$4,000 + 6 × $320 =$5,920

Stephen and Penny

Math Central is supported by the University of Regina and The Pacific Institute for the Mathematical Sciences.