Question

Jose deposited $2500 in an account that pays 6% simple interest. How much money will he have at the end of 3 years?

Answer 1

`\boxed {\boxoed {\sf \$ 2950}}`

Explanation:

We want to calculate Jose's money after 3 years. First, calculate the interest.

For simple interest, the formula is:

`I=p * r * t`

where p is the principal, r is the interest rate, and t is the time.

The principal or starting amount is $2,500. The time is 3 years. The interest rate is 6%, but we must convert this to a decimal. Divide by 100 or move the decimal place 2 spots to the left.

• 6/100=0.06
• 6.0 --> 0.6 --> 0.06

So, we know that:

• p= 2500
• r=0.06
• t=3

Substitute these values into the formula.

`I= 2500 * 0.06 * 3 \\I= 2500 * 0.18 \\I=450`

Jose earned $450 in interest, but we want to know the money he has in total. Therefore, we add his interest to the principal.

`A=p+I \\A= 2500+ 450 \\ A=2950`

After 3 years, Jose has $2,950