Question

A deposit of 7,912 is made into a new account that earns 5.75% simple interest. No additional deposits or withdrawals will be made for 2 years, so what amount will be in the account at the end of those 2 years?

Answer 1

To calculate the total amount in the account at the end of 2 years with simple interest, you can use the formula for simple interest:

\[
A = P + I
\]

where:
- \(A\) is the total amount after time \(t\),
- \(P\) is the principal amount (the initial deposit),
- \(I\) is the interest earned.

First, calculate the interest \(I\) using the formula:

\[
I = P \times r \times t
\]

where:
- \(r\) is the annual interest rate (as a decimal),
- \(t\) is the time in years.

Given:
- \(P = 7,912\),
- \(r = 5.75\% = 0.0575\),
- \(t = 2\) years.

Now, substitute the values into the interest formula:

\[
I = 7,912 \times 0.0575 \times 2
\]

Calculating \(I\):

\[
I = 7,912 \times 0.0575 \times 2 = 7,912 \times 0.115 = 909.88
\]

Now, add the interest to the principal to find the total amount:

\[
A = P + I = 7,912 + 909.88 = 8,821.88
\]

Thus, the amount in the account at the end of 2 years will be **8,821.88**.