Ira invests $8000 into an account that earns 5.6% simple interest for 6 years. He does not make any other deposits or withdrawals.

Question

At the end of 6 years, Ira invests the entire account balance into a different account that earns 6% simple interest. He leaves the money in the account for 3 years without making any additional deposits or withdrawals.

What is the new account balance at the end of 3 years?

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Ira invests $Response area into the account that earns 6% simple interest. At the end of 3 years, the account balance is $Response area.

483.84, 2688, 10.688, 12,611,84, 13,376

Answer 1

To solve the problem, we first need to determine the amount of money Ira has at the end of 6 years after investing in the first account with a 5.6% simple interest rate.

Step 1: Calculate the total amount after 6 years of 5.6% simple interest.

The formula for simple interest is: \[ \text{Total Amount} = \text{Principal} + (\text{Principal} \times \text{Rate} \times \text{Time}) \] Where:

• Principal = $8000
• Rate = 5.6% = 0.056
• Time = 6 years

Calculating the interest earned: \[ \text{Interest} = 8000 \times 0.056 \times 6 = 8000 \times 0.336 = 2688 \]

Now, add the interest to the principal: \[ \text{Total Amount} = 8000 + 2688 = 10688 \]

Step 2: Invest the total amount into a new account at 6% simple interest for 3 years.

Now, Ira invests $10,688 into a new account with a 6% simple interest rate.

Using the same formula for simple interest: \[ \text{Total Amount} = \text{Principal} + (\text{Principal} \times \text{Rate} \times \text{Time}) \] Where:

• Principal = 10688
• Rate = 6% = 0.06
• Time = 3 years

Calculating the interest earned: \[ \text{Interest} = 10688 \times 0.06 \times 3 = 10688 \times 0.18 = 1923.84 \]

Now, add the interest to the principal: \[ \text{Total Amount} = 10688 + 1923.84 = 12611.84 \]

Conclusion

Based on these calculations, we fill in the response areas:

• Ira invests $10,688 into the account that earns 6% simple interest. At the end of 3 years, the account balance is $12,611.84.