Question

Sean used the $1,200 he got from his graduation party to open a savings account. If the account earns 1% interest each month and he makes no additional deposits, how much money will be in the account in 5 years?

Answer 1

`\$1,920`

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=5*12=60\ months\\ P=\$1,200\\r=0.01`

substitute in the formula above

`A=\$1,200(1+0.01*60)`

`A=\$1,200(1.6)=\$1,920`