ISEE Mathematics Achievement Question 211: Answer and Explanation
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Question: 211
6. Renee deposits $4,000 in a savings account that earns 2% simple interest per year. How much interest will she earn after 2 years?
- A. $100
- B. $160
- C. $165
- D. $180
Correct Answer: B
Explanation:
B is correct. Simple interest problems use the formula l = prt where l is the amount of interest, p is the principle or the amount saved or invested, r is the rate of interest, and t is the amount of time that the interest is accruing. In this problem, you are asked to find the interest, given that the principle is $4,000, the rate of interest is 2%, and the amount of time is 2 years. Substituting this information into the formula, you get l = 4,000(0.02)(2) = $160 in interest.