Question

Bob wants to buy a car. He puts $8,000 in a savings account that has a

simple interest rate of 4%. If he leaves his money in the account for 3
years, how will be in his account in TOTAL after 3 years?"

A-$960

B-8,960

C-7,040

D-$320

Answer 1

9514 1404 393

Answer:

B. $8,960

Explanation:

Use your number sense.

If the account earns interest, the balance will increase from the initial deposit of $8000. The only sensible answer choice is B, $8960.

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If you want to actually figure it out, the balance is given by ...

A = P(1 +rt)

A = 8000(1 +0.04·3) = 8000(1.12) = 8960 . . . . matches choice B