Question

Lanny goes to the bank and puts $4000 in a savings account. He earns a simple interest of 2.5%. If he leaves the money in the account for five years, what is the total amount in the account after the five years.

Answer 1

I think it may be approximately 4,525.63

Answer 2

$4500

Explanation:

The simple interest formula is

`A=P(1+rt)`

Where
`A` is the final amount,
`P` is the principal,
`r` is the rate of interest and
`t` is the time periods.

Replacing all given values, we have

`A=P(1+rt)\\A=4000(1+0.025(5))=4500`

Therefore, after 5 years, Lanny would have $4500 with a simple interest of 2.5%.