Question

You receive an inheritance of $15,500, and you place the full amount into a bank account. The bank pays a simple interest rate of 7.5% per year. How much interest have you earned after three years?

Answer 1

After three years you have earned $3,755.60

Explanation:

The first year you start with $15,500 on account and earn $1,162.50 as interest

At the end of the first year the bank account is $16,662.50

The second year you start with $16,662.50 and earn $1,249.69 as interest

So at the end of the second year you have a sum of $17,912.19

Then on the third year you start with $17,912.19 and earn an interest of $1,343.41

So at the end of the third year the total of the bank account is $19,255.60

Now, if you sum the three interests $1,162.50+$1,249.69+$1,343.41 the total is $3,755.60 and this is your answer.

Answer 2

$3488 on Knewton

Explanation: