Question

Gerard deposited $5,600 into a savings account that earns 4.5% simple interest each year calculated annually what is the future value of Gerard's account after 12 years

Answer 1

The simple interest formula is given by;

`I=(P* T* R)/(100)`

Where,
`P=5,600` is the principal,
`T=12` is the time in years and
`R=4.5`% is the rate in percentage.

We just have to plug in these values in to the simple interest formula to obtain,

`I=(5600* 12* 4.5)/(100)`

Multiplying out the numerator gives,

`I=(302400)/(100)`

We simplify to obtain;

`I=3024`

Since Gerard's money earned a simple interest of $ 3024 the total value in his account will increase by $ 3024.

Hence the value of Gerard's account after 12 years is

`5600+3024=`$8,624