I'm very confused on this and i have a test on it soon. Can anyone tell me?!?

1) Supose you put $8,000 into a savings account that earns you 2.5% simple intrest rate. How long will it take you to earn $60 in the bank?

I%26#039;m very confused on this and i have a test on it soon. Can anyone tell me?!?credit union

Simple interest is accrued on the principle only - in your case, the $8,000. That means that every time period that passes you earn 2.5% of the $8,000 (8,000 x .025 = 200). To figure out how long it would take to earn a certain amount (or any other similar question), use the formula:

Interest = Principle x Rate x Time

Plug in the values you know - in this case, interest, principle, and rate - and then solve for the one value that you don%26#039;t.

Note that simple interest is easier to calculate than compound interest, which means that at the end of each time period, you add the interest to the principle. With compound interest, you are earning interest on the old interest - which is good for you if it is your savings account but bad if it is a loan!

Hope that helps!

I%26#039;m very confused on this and i have a test on it soon. Can anyone tell me?!?

loan

I think 3 years.

$80,000 x .0025 = $20/yr