Question

Mary deposits $260.00 into a new savings account.

The account earns 2.5% simple interest per year. No
money is added or removed from the account for
5 years. What is the total amount of money in her
savings account at the end of the 5 years?
A) $292.50
C) $65.00
D) $325.00
B) $32.50

Answer 1

A

Explanation:

To solve this problem, we need to first find out how much interest the account earns each year. If the account earns 2.5% simple interest per year, and it starts with an initial balance of $260, then the interest earned each year is 0.025 * $260 = $6.50.

Over 5 years, the account will earn a total of 5 * $6.50 = $<<5*6.5=32.50>>32.50 in interest.

To find the total amount of money in the account at the end of the 5 years, we need to add the interest earned to the initial balance of the account. The total amount of money in the account will be $260 + $32.50 = $<<260+32.5=292.50>>292.50.

Therefore, the total amount of money in the account at the end of the 5 years is $292.50.

Answer 2

A) $292.50

Explanation:

Simple Interest Formula

A = P(1 + rt)

where:

• A = Final amount
• P = Principal amount
• r = Interest rate (in decimal form)
• t = Time (in years)

Given:

• P = $260.00
• r = 2.5% = 0.025
• t = 5 years

Substitute the given values into the formula and solve for A:

⇒ A = 260(1 + 0.025 · 5)

⇒ A = 260(1 + 0.125)

⇒ A = 260(1.125)

⇒ A = 292.50

Therefore, the total amount of money in her savings account at the end of 5 years is $292.50.