Question

Ryan deposits $750 in an account that pays 4% simple interest per year. He plans to keep the money in an account for five years, and he doesn't plan to make any other deposits into the account.

What would be Ryan's total balance if he left the money to accumulate the same rate of interest for 10 years without any withdrawals or deposits? Create a graph of the function on the coordinate plane below to justify your response.

Answer 1

Ryan's total balance after 10 years would be $1080 if he left the money to accumulate at a 4% simple interest rate.

Step-by-step explanation:

To find Ryan's total balance after 10 years, we need to calculate the simple interest earned on his initial deposit over this period. The formula for calculating simple interest is:

Simple Interest = Principal x Rate x Time

Given that Ryan's initial deposit is $750 with an interest rate of 4% per year and he plans to keep the money for 5 years, we can substitute these values into the formula:

Simple Interest = $750 x 0.04 x 5 = $150

Therefore, the simple interest earned over 5 years is $150. Adding this to the initial deposit gives us the total balance after 5 years:

Total Balance after 5 years = $750 + $150 = $900

Now, if this total balance is left to accumulate for another 5 years without any withdrawals or deposits, the interest earned will be based on the new principal amount of $900. Using the same interest rate of 4% per year and applying the formula again:

Simple Interest = $900 x 0.04 x 5 = $180

Finally, adding the simple interest of $180 to the total balance after 5 years gives us the final balance after 10 years:

Final Balance after 10 years = $900 + $180 = $1080