Edward earn $720 in interest if the Edward deposited $6,000 into a savings account 4 years ago. The simple interest rate is 3%.
It is defined as the interest on the based on the principal amount, it does not include the compounded amount. The interest calculate on the initial amount or borrowed amount.
We know the formula for the simple interest:
[tex]\rm A = P(1+rt)[/tex]
We have P = $6,000
r = 3% = 0.03
t = 4 years
[tex]\rm A = 6000(1+0.03\times4)[/tex]
After calculating, we will get:
A = 6720
The simple interest = 6720 - 6000 = $720
Thus, Edward earn $720 in interest if the Edward deposited $6,000 into a savings account 4 years ago. The simple interest rate is 3%.
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