Question

How much money is in Joe's savings account after 3 years if he deposited $400 at the beginning of the year and the account pays 4% annual simple interest?

Answer 1

$448

Explanation:

To calculate Joe's savings, we can use the formula for simple interest:

P = Po*(1+r*t)

Where P is the final value, Po is the inicial value, r is the interest and t is the time in years.

So, In our problem, we have that Po = 400, r = 4% and t = 3, then we can find P:

P = 400*(1+0.04*3)

P = 400*1.12 = $448

Joe has $448 in his savings.

Answer 2

Total amount in Joe's savings account T = $448

Explanation:

Given;

time t = 3 years

Annual rate r = 4%

Principal P = $400

Simple interest can be expressed as;

I = Prt/100

Substituting the given values;

I =400×4×3/100 = 4800/100

I = $48

Total amount in account T;

T = P + I = $400 + $48 = $448