Question

$5,000 was put into a savings account and earned simple interest at a rate of 2% per year. After 15 years of saving the money, what is the total amount in the savings account?

a) $7,500
b) $6,000
c) $5,150
d) $5,750

Answer 1

The total amount in the savings account after 15 years is $6,500, which is obtained by adding the simple interest ($1,500) calculated using the formula I = PRT at a 2% rate over 15 years, to the original $5,000 principal.

Step-by-step explanation:

To find the total amount in the savings account after 15 years, we need to calculate the simple interest and then add it to the original principal of $5,000. The formula for simple interest is I = PRT, where I represents the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

To calculate the simple interest earned in 15 years:

I = $5,000 × 0.02 × 15 = $1,500

Now, add the interest to the initial principal:

Total Amount = Principal + Interest

Total Amount = $5,000 + $1,500 = $6,500

Therefore, the correct answer is (b) $6,000.