Question

A new bank customer with ​$3 comma 500 wants to open a money market account. The bank is offering a simple interest rate of 1.4​%.
a. How much interest will the customer earn in 20 ​years?
b. What will the account balance be after 20 ​years?
Question content area bottom
Part 1
a. The customer will earn ​$
  
enter your response here in interest.  

Answer 1

To calculate the interest earned on a money market account with a simple interest rate, you can use the formula:

\[
\text{Interest} = P \times r \times t
\]

Where:
- \( P \) is the principal amount (initial deposit),
- \( r \) is the interest rate (as a decimal),
- \( t \) is the time in years.

Given:
- \( P = 3500 \)
- \( r = 1.4\% = 0.014 \)
- \( t = 20 \) years

### Part a: Calculate the interest earned after 20 years.

\[
\text{Interest} = 3500 \times 0.014 \times 20
\]
\[
\text{Interest} = 3500 \times 0.014 = 49 \quad \text{(interest per year)}
\]
\[
\text{Interest} = 49 \times 20 = 980
\]

The customer will earn **$980** in interest after 20 years.

### Part b: Calculate the account balance after 20 years.

The total account balance will be the sum of the principal and the interest earned:

\[
\text{Total Balance} = P + \text{Interest}
\]
\[
\text{Total Balance} = 3500 + 980 = 4480
\]

The account balance after 20 years will be **$4,480**.

In summary:
- Interest earned in 20 years: **$980**
- Account balance after 20 years: **$4,480**