Question

At the beginning of year 1, Bode invests $250 at an annual simple interest rate of 3%. He makes no deposits to or withdrawals from the account.Which explicit formula can be used to find the account’s balance at the beginning of year 14? What is the balance?

A.A(n) = (250)(n – 1)(0.03); $97.50 B.A(n) = 250 + (n)(0.03 • 250); $355.00 C.A(n) = 250 + (n – 1)(0.03); $250.39 D.A(n) = 250 + (n – 1)(0.03 • 250); $347.50

Answer 1

D.A(n) = 250 + (n – 1)(0.03 • 250); $347.50

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=(14-1)=13\ years\\ P=\$250\\r=0.03`

substitute in the formula above

`A=\$250(1+0.03*13)`

`A=\$250(1.39)=\$347.50`