Question

My District PortalAssor School: Practice & Problem SolvingQuestion Help3.6.PS-10A new bank customer with $5,000 wants to open a money market account. The bank is offering asimple interest rate of 1.6%.a. How much interest will the customer earn in 30 years?b. What will the account balance be after 30 years?a. The customer will earn $in interest.

Answer 1

we know that

The simple interest formula is equal to

`A=P(1+rt)`

`A=P\mleft(1+rt\mright)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

P=$5,000

r=1.6%=1.6/100=0.016

t=30 years

substitute the given values

`\begin{gathered} A=5,000(1+0.016\cdot30) \\ A=\$7,400 \end{gathered}`

Part a

How much interest will the customer earn in 30 years?

I=A-P

I=7,400-5,000=$2,400

answer part a is $2,400

Part b

What will the account balance be after 30 years?

answer part b is $7,400