Question

Lucas spends $83.42 in additional interest and charges on monthly payments as the result of a prior bankruptcy. If Lucas been able to save this money for the year and then put it into a savings account earning 1.8% simple interest, how much money could he have in savings after 3 more years?

Answer 1

B.) 1,055.10

Explanation:

Took the test and was right

Answer 2

$1,056.07

Step-by-step explanation:

Given:

Amount spent each month = $83.42

Interest rate, r = 1.8% = 0.018

Time, n = 3 years

Now,

The total amount collected at the end of the year = $83.42 × 12 = $1001.04

The value of amount deposited in the bank after 3 years will be

Future value = Present value × ( 1 + r )ⁿ

on substituting the respective values, we have

Future value = $1001.04 × ( 1 + 0.018 )³

or

Future value = $1,056.07

Hence,

The money he could have at the end of 3 more years will be $1,056.07