Question

Michelle received $2300 as graduation gifts. She decided to open a savings account with the money. The savings account will draw 7% simple interest annually. If she leaves the money in the savings account for the next four years. How much money will there be in her savings account at the end the four years?

Answer 1

In order to calculate simple interest, we can use the following formula:

`P=P_0+P_0\cdot i\cdot t`

Where P is the final value, P0 is the initial value, i is the interest and t is the amount of time.

Using P0 = 2300, i = 7% = 0.07 and t = 4, we have:

`\begin{gathered} P=2300+2300\cdot0.07\cdot4 \\ P=2300+2300\cdot0.28 \\ P=2300+644 \\ P=2944 \end{gathered}`

So Michelle will have $2944 in her savings account after four years.