Question

Tom opens a bank account and makes an initial deposit of $500. The banker tells Tom that he is going to receive

an annual rate of 6% on his investment. Find the bank balance assuming Tom leaves the account untouched for 15
years.

Answer 1

Bank balance after 15 years is $950

Explanation:

• Step 1: Find the simple interest on the principal amount using the formula SI = PRT/100 where Principal (P) = $500, Rate of Interest (R) = 6% and Time(T) = 15 years

⇒ SI = 500 × 6 × 15/100 = $450

• Step 2: Find total amount using the formula Amount = P + SI

⇒ Amount = 500 + 450 = $950