Question

You were born, your mother deposited 2000 in an account that pays 5% simple interest. How much would the balance be in your account when you enter college 18 years after?

A. 18000
B. 1800
C. 3800
D. 20000

Answer 1

C

Explanation:

the formula for simple interest is given as A=P(1+rt), where A is the final balance, P is the initial principal balance (the amount of money that you start out with), r is the annual interest rate, and t is the time

we know that the mom deposited 2000 into an account when the person was born. This is our initial principal balance (the amount of money started out with)

substitute that value into the formula to get:

A=2000(1+rt)

we also know the rate, which is 5% and the time, which is 18

5%=0.05 (we need it as a decimal)

so substituting the values into the equation:

A=2000(1+0.05*18)

A=2000(1+0.9)

A=2000(1.9)

A=3,800

therefore the answer is C

Hope this helps!