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?

1 answer

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.