Question

How much money will be in a bank account after 4 years if $8 is deposited at an interest rate of 5%?

a.
$12.00
c.
$16.00
b.
$10.41
d.
$9.72

Answer 1

$9.60

Explanation:

The question above is a simple interest question.

The formula for the amount of money after a given period of time using simple interest is given as:

A = P(1 + rt)

Where

P = Initial Amount saved or invested = $8

R = Interest rate = 5%

t = Time in years = 4

Calculation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year.

Solving our equation:

A = 8(1 + (0.05 × 4)) = 9.6

A = $9.60

The amount of money that will be in a bank account after 4 years is $9.60