Joe deposits $7000 into an account that pays simple interest at a rate of 6% per year. How much interest will he be paid in the first 6 years?$
Solution
To calculate the simple interest, you can use the formula:
Interest = Principal x Rate x Time
where:
- Principal is the initial amount of money that was deposited or loaned. In this case, it's $7000.
- Rate is the annual interest rate. Here, it's 6% or 0.06 when expressed as a decimal.
- Time is the length of time the money is deposited or borrowed for, in years. Here, it's 6 years.
So, the interest Joe will be paid in the first 6 years is:
Interest = 2520.
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