Question

Colin invests £1100 into his bank account.

He receives 5% per year simple interest.
How much will Colin have after 3 years?
Give your answer to the nearest penny where appropriate.

£

Answer 1

Where: A = P(1 + rt)

A = $1,265.00

I = A - P = $165.00

Equation:

A = P(1 + rt)

Calculation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year.

Solving our equation:

A = 1100(1 + (0.05 × 3)) = 1265

A = $1,265.00

The total amount accrued, principal plus interest, from simple interest on a principal of $1,100.00 at a rate of 5% per year for 3 years is $1,265.00.