Question

Raphael deposited $6,500 in an account that pays 4.25% interest, compounded annually. He left the money in the account for 4 years, without depositing money to it or withdrawing money from it.

At the end of the 4 years, how much interest in dollars and cents did the account earn?

Answer 1

$1105

Explanation:

First, converting R percent to r a decimal

r = R/100 = 4.25%/100 = 0.0425 per year,

then, solving our equation

I = 6500 × 0.0425 × 4 = 1105

I = $ 1,105.00

The simple interest accumulated

on a principal of $ 6,500.00

at a rate of 4.25% per year

for 4 years is $ 1,105.00.