Question

Laura deposited $4,000 in her new bank account. The bank pays 7.25% simple interest every year. What will be the balance of her account at the end of 3 years, if she make no additional deposits or withdrawals?

Answer 1

The balance of Laura's account at the end of 3 years will be $4,870.

Explanation:

Formula of simple interest:

`I`=Prt

`I` = simple interest

P= Principal

r = rate of interest

t= time in year.

Amount after t years (A)= P+
`I`.

Given that,

Laura deposits $4,000 at a rate 7.25% simple interest.

Here, P=$4,000, r=7.25%= 0.0725, t=3 years

`I`=Prt

=$(4,000×0.0725×3)

=$870

The balance of Laura's account at the end of 3 years will be =$(4,000+870)

=$4,870