Question

Malika invests money in an account paying a simple interest of 6% per year. If no money will be added or removed from the investment, what should she multiply her current balance by to find her total balance in a year in one step?

Answer 1

To determine the total balance in a year with a simple interest rate of 6%, Malika can use the formula for calculating the future balance with simple interest:

\[
\text{Total Balance} = \text{Principal} + \text{Interest}
\]

The interest earned in one year can be calculated as:

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

where:
- Principal is the current balance,
- Rate is the interest rate (6% or 0.06 as a decimal),
- Time is the period in years (1 year in this case).

Thus, for one year, the interest earned would be:

\[
\text{Interest} = \text{Principal} \times 0.06 \times 1 = \text{Principal} \times 0.06
\]

Now substituting back into the total balance formula:

\[
\text{Total Balance} = \text{Principal} + \text{Principal} \times 0.06
\]

Factoring out the Principal, we get:

\[
\text{Total Balance} = \text{Principal} (1 + 0.06) = \text{Principal} \times 1.06
\]

Therefore, to find the total balance in a year, Malika should multiply her current balance by **1.06**.