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Joe deposits $7000 into an account that pays simple interest at a rate of 6% per year. How much interest will he be paid in the first 6 years?$

Question

Joe deposits 7000intoanaccountthatpayssimpleinterestatarateof67000 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?

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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 = 7000x0.06x6=7000 x 0.06 x 6 = 2520.

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