Question

A family earns $1,240,000 each year. If they invested half of their yearly earnings in a savings account earning 4% simple interest, how much would a savings account have in total it at the end of five years

Answer 1

Answer: Savings account will have $ 1,364,000 in total at the end of five years.

Explanation:

Given: Yearly earning = $1,240,000

Rate of interest =4% = 0.04

Time = 5 years

Amount invested =
`\frac12` of (Yearly earning)

`=\$\ \frac12(1240000)\\\\=\$620000`

Simple interest = principal x rate x time

Simple interest = $ [ (620000) x (0.04) x (5)]

= $124000

Amount after 5 years = principal + interest

= $ ( 1240000+124000 )

= $ 1,364,000

Hence, savings account will have $ 1,364,000 in total at the end of five years.