Question

Alexa opens a savings account with a starting balance of $10,000. She will not make any additional deposits or withdrawals. The account earns 5% simple interest. What is the total amount that Alexa will have in her account at the end of 4 years?

Answer 1

$12,000

Explanation:

Use the simple interest formula: P = A(1 + rt)

P = final balance (?)

A = starting balance (10,000)

r = interest rate (0.05)

t = years (4)

P = 10,000(1 + 0.05 · 4)

P = 10,000(1 + 0.2)

P = 10,000(1.2)

P = 12,000