Question

An accountant pays 8% per year simple intrest, in year 1 the amount in the account is $850 how much is the account in year 6?

Answer 1

Simple interest can be calculated by using the following:
A = P(1 + rt) where A is the total amount of principle and interest: P is the initial investment; r is the rate of interest; and t is the time

Using P = 850, r = .08, and t = 5
A = 850(1+ .08(5))
A = 850(1.4)
A = 1190 the amount in the account in year 6

Answer 2

hmmm, as I read it, in year 1, but it doesn't say at the beginning of the year or end, so we'll be assuming is at the beginning of year 1, the amount is 850, how much will it be at the beginning of year 6? namely, 5 years later.


`\bf ~~~~~~ \textit{Simple Interest Earned Amount}\\\\ A=P(1+rt)\qquad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\to& \$850\\ r=rate\to 8\%\to (8)/(100)\to &0.08\\ t=years\to &5 \end{cases} \\\\\\ A=850[1+0.08(5)]\implies A=850(1.4)`