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.

Which amount is closest to the balance in the account at the end of 2 years

Answer 1

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

\[
A = P(1 + rt)
\]

Where:
- \(A\) is the total amount (the balance in the account)
- \(P\) is the principal amount (the initial deposit)
- \(r\) is the annual interest rate (in decimal)
- \(t\) is the time in years

In this case:
- \(P = 7,912\)
- \(r = 5.75\% = 0.0575\)
- \(t = 2\)

Now plug in the values:

\[
A = 7912(1 + 0.0575 \times 2)
\]
\[
A = 7912(1 + 0.115)
\]
\[
A = 7912(1.115)
\]
\[
A \approx 8,811.38
\]

Therefore, the amount closest to the balance in the account at the end of 2 years is approximately **$8,811.38**.