Question

1. richard deposited $5,500 for 6 years on 2.40% interest rate in his savings account. how much simple interest will he earn?

Explanation:

Step1: Recall simple interest formula

The formula for simple interest is \( I = P \times r \times t \), where \( I \) is the simple interest, \( P \) is the principal amount, \( r \) is the annual interest rate (in decimal form), and \( t \) is the time in years.

Step2: Convert rate to decimal

The interest rate is \( 2.40\% \), so we convert it to a decimal by dividing by 100: \( r=\frac{2.40}{100} = 0.024 \).

Step3: Identify values

Here, \( P = \$5500 \), \( r = 0.024 \), and \( t = 6 \) years.

Step4: Calculate simple interest

Substitute the values into the formula: \( I=5500\times0.024\times6 \). First, calculate \( 5500\times0.024 = 132 \). Then, multiply by 6: \( 132\times6 = 792 \).

Answer:

The simple interest Richard will earn is \(\$792\).