Question

Kevin wants to save for college. He plans on attending the University of Texas. He starts with $20,000 in his account and gains 5% simple interest for 4 years. How much money is in his account at the end of the 4 years?

A. $23,000
B. $24,000
C. $21,000
D. $22,000

Answer 1

Kevin will have $24,000 in his account after 4 years based on simple interest calculation, which makes option B the correct answer.

Step-by-step explanation:

Kevin is looking into saving for college and has a starting amount of $20,000 in his account. To calculate the total amount after 4 years with a simple interest rate of 5%, we use the formula for simple interest, which is Principal × Rate × Time. Since this question is about simple interest and not compound interest, we won't be using the power of compound interest to calculate gains.

First, let's find the total interest earned in 4 years:

• Interest = Principal × Rate × Time
• Interest = $20,000 × 5% × 4
• Interest = $20,000 × 0.05 × 4
• Interest = $4,000

Next, let's add the interest to the principal amount to find the total in the account after 4 years:

• Total Amount = Principal + Interest
• Total Amount = $20,000 + $4,000
• Total Amount = $24,000

So, at the end of the 4 years, Kevin will have $24,000 in his account, which corresponds to option B.