Question

Calculate what an investment of $1300 would be worth after 27 months if it earned 3.8% simple interest per year.

a) $1409.66
b) $1410.94
c) $1411.50
d) $1412.18

Answer 1

The answer of the given equation is b) $1410.94

Step-by-step explanation:

The formula for calculating the future value (\(FV\)) of an investment with simple interest is given by:

`\[ FV = P(1 + rt) \]`

Where:

-
`\( P \)` is the principal amount (initial investment),

-
`\( r \)` is the annual interest rate,

-
`\( t \)` is the time in years.

In this case:

-
`\( P = $1300 \),`

-
`\( r = 3.8\% \)` or
`\( 0.038 \)` (converted to decimal),

-
`\( t = 27/12 \)` years (since the interest is compounded annually).

Substitute these values into the formula:

`\[ FV = 1300 * (1 + 0.038 * (27)/(12)) \]`

Calculate the result:

`\[ FV \approx $1410.94 \]`

Therefore, the correct answer is (b) $1410.94.