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Question:

A teacher deposited $3,000 in a retirement fund. If she didn’t add any more money to the fund, which earns an annual interest rate of 6%, how much money would she have in 1 year?

A
$3,180

Explaination

To determine the amount of interest earned, multiply the principal ($3,000) by the interest rate (6%) and the number of years interest accrues (1 year): $3,000 × 0.06 × 1 = $180. Add the interest earned to the principal to show how much total money the teacher would have: $180 + $3,000 = $3,180.