Question

A trust fund yields a 6% simple interest dividend to its members' accounts every month. If a member has $5,000 in the fund's account, how much money would be in that account after 3 months?

A. $300
B. $5,000
C. $5,300
D. $8,000

Answer 1

After 3 months, the amount in the account will be C. $5,075.

Step-by-step explanation:

To calculate the amount of money in the account after 3 months, we need to find the simple interest earned each month and then add it to the initial amount.

First, calculate the simple interest for one month:

Simple Interest = Principal × Rate × Time

Simple Interest = $5,000 × 0.06 × (1/12)

Simple Interest = $25

Next, calculate the total amount in the account after 3 months:

Total Amount = Principal + Simple Interest × Time

Total Amount = $5,000 + $25 × 3

Total Amount = $5,000 + $75

Total Amount = $5,075

Therefore, the correct answer is C. $5,075.

Answer 2

After 3 months, the member's account in the trust fund would have $5,300. Option C.

Step-by-step explanation:

The interest earned on the $5,000 in the trust fund's account is calculated monthly at a 6% simple interest rate. After the first month, the interest earned is $5,000 * 0.06 = $300. This amount is added to the initial deposit, resulting in a total of $5,300 at the end of the first month.

For the second month, the interest is again calculated on the new total of $5,300. The interest earned in the second month is $5,300 * 0.06 = $318. The total in the account at the end of the second month is $5,300 + $318 = $5,618.

In the third month, the interest is calculated on the updated balance of $5,618. The interest earned in the third month is $5,618 * 0.06 = $337.08. Adding this interest to the balance at the end of the second month results in a total of $5,618 + $337.08 = $5,955.08.

Therefore, after 3 months, the member's account in the trust fund would have $5,955.08, which is closest to the option C of $5,300.