Question

If Aldo puts 400 into a savings account that paid an interest rate of 5.4 percent What was the total amount in his account at the end of one year (total amount equals principal plus interest)

Answer 1

`\$421.60`

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=1\ year\\ P=\$400\\ A=?\\r=5.4\%=5.4/100=0.054`

substitute in the formula above

`A=400(1+0.054*1)`

`A=400(1.054)`

`A=\$421.60`

Remember that Interest is equal to

`I=A-P`

`I=\$421.60-\$400=\$21.60`