Question

Zachary invests $400 into an account that eams 3.5% simple interest for 5 years. He does not make any other deposits or

withdrawals
At the end of 5 years, Zachary invests the entire account balance into a different account that eams 5% simple interest. He leaves the
money in the account for 2 years without making any additional deposits or withdrawals
What is the new account balance at the end of 2 years?
Drag and drop values into the boxes to correctly complete the statements
Zachary invests s
into the account that earns 5% simple interest. At the end of 2 years, the account balance iss

Answer 1

Answer: He invests $470 and the balance is $517 at the end of 2 years

Answer 2

$470

$517

Explanation:

Simple interest formula: A = P(1 + rt)

where A is the final amount, P is the principal amount, r is the annual rate interest (in decimal form), t is time (in years)

Zachary invests $400 into an account that earns 3.5% simple interest for 5 years. So the account balance at the end of 5 years will be:

P = 400

r = 3.5% = 3.5/100 = 0.035

t = 5

⇒ A = 400(1 + 0.035 x 5) = 400 (1.175) = 470

So Zachary has $470 in his account after 5 years.

Now he is investing $470 into an account for 2 years earning 5% interest. So the new account balance at the end of 2 years will be:

P = 470

r = 5% = 5/100 = 0.05

t = 2

⇒ A = 470(1 + 0.05 x 2) = 470(1.1) = 517