Question

Tyler’s mom also has $1000 that she wants to put in a savings account. She is saving her money for retirement. She plans to retire in 30 years. Tyler’s mom must also choose between Bank A and Bank B. Bank A offers 4% simple interest. How much would Tyler’s mom’s investment be worth after 30 years in this account? Show your calculations below.

Answer 1

Tyler’s mom $1,000 investment will be worth $2,200 after 30 years, invested at 4% interest rate.

The following data:

Principal = $1000

Interest rate = 4% simple interest

Term or time period = 30 years

Since simple interest is given, we need to use the simple interest formula:

I = P x R x T

P is the principal, R is the interest rate, and T is the time the money will be invested.

I = $1000 x 4% x 30yrs

I = $1000 x 0.04 x 30

I = 40 x 30

I = 1,200 ==> Interest earned after 30 years is $1,200.

Total Investment = Principal + Interest

T.I. = $1,000 + $1,200

T.I. = $2,200 ==> the value of Tyler’s mom’s investment after 30 years.

Hope this helps!!

Answer 2

The amount of interest earned will be ...
I = Prt
I = $1000*0.04*30
I = $1200

The amount in the account will be the sum of the principal amount and the interest it earns:
$1000 +$1200 = $2200

Tyler's mom's investment will be worth $2200 in this account.