Question

Danny invests $10,000 in a savings account that pays 3.5% simple interest. If Danny does not make any additional deposits or withdrawals, how much will be in the account after 7 years?

Answer 1

Answer: $12,450

Explanation:

Hi, to answer this question we have to apply the simple interest formula:

I = p x r x t

Where:

I = interest

P = Principal Amount

r = Interest Rate (decimal form)

Replacing with the values given

I = 10,000 x (3.5/100) x 7

I = 2,450

Adding the interest to the amount invested.

10,000 + 2,450 = $12,450

Feel free to ask for more if needed or if you did not understand something.

Answer 2

The amount in the account after 7 years is $12,450

Explanation:

To calculate the amount that will be in the account after 7 years, what we do is to simply add the interest to the principal.

Thus, we need to calculate the interest. Mathematically, the simple interest can be calculated using the formula below;

I = PRT/100

where P is the principal which is the amount deposited initially into the account = $10,000

R is the interest rate which is 3.5%

T is time which is 7 years

Plugging these figures, we have

I = (10,000 * 3.5 * 7)/100

I = $2,450

Thus the amount we have in the account which is interest + capital = 2,450 + 10,000 = $12,450