Use the simple interest formula I=prt, where I is the interest, p the principal, r the annual interest rate, and t the time in years.
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If we deposit money in a savings account, the bank pays us interest for the use of our money. To calculate the interest I, we use the simple interest formula.
I= p r t, where...
I& =Interest
p& = Principal
r& = Annual interest rate
t& = Time (in years)We made a deposit of $480 in a savings account with an interest rate of 1.5 % = 0.015. We want to calculate the interest — how much we will earn in 5 years.
p= 480, r= 0.015, t= 5
To calculate the interest, we will substitute these values into the simple interest formula and evaluate the right-hand side.
