Money with Nathan in his savings account = $40
Rate of interest per annum = 5%
We know that :
[tex]\color{hotpink}\tt \: simple \: interest \color{plum}= \frac{principal \times rate \times time}{100} [/tex]
In this case :
Principal = $40
Rate = 5%
Time = 1 year
Simple interest he will earn in 1 year :
[tex] =\tt \frac{40 \times 5 \times 1}{100} [/tex]
[tex] = \tt \frac{200}{100} [/tex]
[tex]\color{plum} =\tt\$ \: 2[/tex]
Amount = Principal + Interest
Amount Nathan has to pay at the end of one year :
[tex] = \tt40 + 2[/tex]
[tex]\color{plum} =\tt \$42[/tex]
Thus, at the end of 1 year Nathan has to pay $42.
Therefore, simple interest Nathan will earn in 1 year = $2
