Question

What will be the new balance on $800 in an account that earns 2% simple interest for 5 y

Answer 1

Step-by-step explanation: Once we are working with the simple interest we can use the following simple interest formula

`\begin{gathered} A=P_o(1+rt) \\ \text{Where:} \\ A=\text{end amount} \\ P_o=\text{initial amaount} \\ r=\text{interest rate} \\ t=\text{time} \end{gathered}`

Step 1: Considering we have an annual percentage rate we have r = 2%/100 = 0.02

Step 3: Now Let's substitute our values and calculate

`\begin{gathered} A=P_o(1+rt) \\ A=800(1+0.02\cdot5) \\ A=880 \end{gathered}`

Final answer: So, after 5 years the new balance will be $880.