Question

An account pays 7% per year simple interest. In year 1, the amount in the account is $950. How much is in the account in year 6?

A.$1316.27
B.$1282.50
C.$1256.50
D.$1332.42

Answer 1

there are 5 more payments of interest
= 5 * 0.07 * 950 = 332.5
so amount in the account after 6 years = 950 + 332.5 = 1282.5

Answer 2

$1282.5

Explanation:

Given : Rate of interest = 7% = 0.07

The amount in the account is $950 in first year.

To Find : Amount in the account in year 6

Solution :

Since we need to calculate for sixth year and we are given the amount of first year . So, to calculate simple interest for sixth year we use time = 5 years

First we need to calculate the amount of interest for 5 years

Formula of simple interest : Principal * Rate * Interest

⇒
`S.I. = 950*0.07*5`

⇒
`S.I. = 332.5`

Thus, The simple interest for 5 years is $332.5

Now, amount in the account in year 1 is $ 950 . After the addition of interest for 5 years the amount in sixth year will be :

⇒ $ 950 +$332.5

⇒$1282.5.

Thus, the amount in sixth year will be $1282.5