Question

5) A savings account earns 4.5% annual simple interest. The principle is

$1300. What is the balance after 3 years? *

Answer 1

$1483.52

Explanation:

P=principle

Fn=total at the end of a given year(=n) (subscript)

I= interest in decimal

F=P(1+I)

at end of first year F1=P(1+I)

at end of second year F=F1(1+I)= P(1+I)(1+I)= P(1+I)^2

or in general Fn=P(1+I)^n