Final answer:
Using the simple interest formula, Thomas will have $131.44 after 4 years if he invests $106 into an account with a 6% simple interest rate.
Step-by-step explanation:
Calculating the Future Value with Simple Interest:
To calculate how much money Thomas will have at the end of 4 years with an account that pays simple interest, we'll use the formula for simple interest:
Simple Interest = Principal × Rate × Time
Where the principal is the initial amount invested ($106), the rate is 6% (or 0.06 when expressed as a decimal), and the time is the number of years the money is invested (4 years).
The calculation is as follows:
- Simple Interest = $106 × 0.06 × 4
- Simple Interest = $25.44
Next, we add the simple interest earned to the principal to get the total future amount:
- Total future amount = Principal + Simple Interest
- Total future amount = $106 + $25.44
- Total future amount = $131.44
Therefore, after 4 years, Thomas will have $131.44 in the account.