Question

Calculate the new balance of an account that has been sitting for three years with a 1.5% interest rate and had an initial deposit of 5000

Answer 1

$5225

Explanation:

Use the formula for the amount after simple interest:
`A = P(1 + rt)`

"A" is the final amount, or balance.

"P" is the principal, or the starting amount.

"r" is the rate of interest in decimal form.

"t" is the time.

What we know:

P = 5000

t = 3

r = 1.5%

Convert the rate to decimal form by dividing by 100, or moving the decimal place two places to the left.

1.5% => 0.015 = r

Substitute what we know into the formula:

A = P(1 + rt)

A = 5000(1 + (0.015)(3)) <=simplify

A = 5000(1 + 0.045)

A = 5000(1.045)

A = 5225 <= new balance

The new balance of an account is $5225.