Question

Calculate the amount of money you'll have at the end of the indicated time period:

You invested $2000 in an account that pays simple interest of 3% for 20 years. How much money will you have at the end of the 20 years?

A) $2600
B) $3200
C) $3800
D) $4000

Answer 1

Using the simple interest formula, an investment of $2000 at a 3% annual interest rate for 20 years will result in a total of $3200 at the end of the period.

Step-by-step explanation:

To calculate the amount of money you will have at the end of the period with simple interest, you can use the formula A = P(1 + rt), where A is the total amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (in decimal), and t is the time in years.

Given:
P = $2000
r = 3% or 0.03
t = 20 years

Using the formula,

1. Convert the interest rate from a percentage to a decimal: r = 3% or 0.03
2. Plug the values into the formula: A = $2000(1 + 0.03 * 20)
3. Calculate the interest: A = $2000(1 + 0.6)
4. Calculate the total amount: A = $2000 * 1.6
5. A = $3200

Therefore, after 20 years, you will have $3200.