Question

Mr. & Mrs. Vick deposited $3,500 into a simple interest college savings account earning 6.5% annually when their son was born. How much money will be in the savings account when their son is 18 years old?

Answer 1

Explanation:

Find the future value amount using simple interest;

Amount :A = S.I + Principal, and

Simple interest (S.I) formula = Principal * rate* time

Principal = 3,500

rate = 6.5% or 0.065 as a decimal

time = 18

so, S.I = 3,500* 0.065 * 18

Simple Interest = 4,095

Amount = Simple interest + Principal ;

Amount = 4,095 +3,500

Amount =$7,595

The amount in the account after 18 years would be $7,595