Question

Please help

Sam deposits $12,500 each year into a retirement account with a 3% simple interest
rate. If he deposits the same amount each year, how much money will he have at the
end of his fourth year?
$13,625
$26,725
$52,250
$54,500

Answer 1

52,500

Explanation:

I took the test and thats what it was

Answer 2

$53750

Explanation:

Sam deposit $12500 every year which grows at a simple interest of 3% and we have to calculate the total sum after 4 years.

If Sam deposit $x with r% simple interest then the principal will grow after 4 years to
`x[1 + (4r)/(100)]`

Again, for the second year $x investment with r% simple interest will grow to
`x[1 + (3r)/(100)]`.

Now, the third year $x investment with r% simple interest will grow to
`x[1 + (2r)/(100)]`

And finally the fourth year $x investment with r% simple interest will grow to
`x[1 + (r)/(100)]`

Therefore, the total sum becomes

`x[1 + (4r)/(100)] + x[1 + (3r)/(100)] + x[1 + (2r)/(100)] + x[1 + (r)/(100)]`

=
`4x + (10 * r * x)/(100)`

=
`4x + (rx)/(10)`

So, in case of Sam the sum will be =
`4 * 12500 + (3 * 12500)/(10)` = $53750