Question

Find the future value in dollars of an 18 month investment of $4900 into simple interest rate account that has an annual simple interest rate of 5.5%

Answer 1

$5304.25.

Step-by-step explanation:

The simple interest formula is given by

`A=P(1+rt)`

where

A = future value

P = princple amount

r = interest rate /100

t = time interval.

Now in our case

A = unknown

P = $4900

r = 5.5 / 100

t = 18 / 12 ( we are converting months to years. 18 months = 18 /12 years )

Putting the above values into the simple interest rate formula gives

`A=4900\lbrack1+(5.5)/(100)*((18)/(12))\rbrack`

which simplifies to give

`\boxed{A=\$5304.25.}`

Hence, the future value is $5304.25.