Question

Juan decided to start saving for college. He deposited $500 into an account which earns 4% simple annual interest. At the end of each year, he will add $250 to this account. How much will he have in his account after the end of three years?

Answer 1

$5504

Explanation:

Given that :

Principal amount = $500

Interest = 4% simple interest annually

Amount added at the end of each year :

First year:

Principal + (Principal * rate * time)

500 + (500 * 0.04) = 520

$520 + $250 = $770

2nd year:

770 + (770 * 0.04) = $800.80

$800.80 + $250 = 1050.80

3rd year:

1050.8 + (1050.8 * 4) = 5254

$5254 + 250 = $5504