Question

After several years of working, Katy has saved $125,000. If she invests that $125,000 in a savings fund that adds 4% each

year, about how much will her savings account have after15 years? For this question, ignore compounding and taxes, and

assume Katy does not put additional money into savings.

A $185,000

(B) $200,000

C $190,000

(D) $175,000

Question 16

10 Points

Answer 1

(B) $200,000

Explanation:

The value of the simple interest account can be found using the formula ...

A = P(1 +rt) . . . . . where P is the principal invested at rate r for t years

__

Using the given values, we find the value of the account to be ...

A = $125,000(1 +0.04×15) = $125,000(1.6)

A = $200,000

Katie's savings will be worth $200,000 after 15 years.