Question

Brittany invests $1000 into a savings account with an annual simple interest rate of 3%. Her bank charges no annual fees. How much will Suzy have after 5 years? Show your work.

Answer 1

$150

Explanation:

Original Savings (Year 0): $1,000

Convert Interest rate into a decimal: 3 / 100 = 0.03

therefore the interest rate is 1.03

How much will be added each year?

• $1,000 x 1.03 = $1,030
• --> $30
• this shows that $30 dollars will be added per year, the interest is a simple rate and so it will not increase per year.

5 years = $30 x 5 = $150

Final sum: $1,000 x $150 = $1,150

Suzy will have $1,150 in her account at the end of a five year period.