Question

Ricky spends $103.19 in additional interest and charges on monthly payments as the result of a prior bankruptcy. If Ricky had been able to save this money for one year and then put it into a savings account earning 3.1% simple interest, how much money could he have in savings after two more years?
a.
$1,238.28
b.
$1,276.67
c.
$1,315.06
d.
$2,476.56


Please select the best answer from the choices provided.

A
B
C
D
Mark this and return

Answer 1

He pays $103.19 each month, so in one year he'd have 103.19 × 12 = $1,238.28. With simple interest for 2 years at 3.1%: A = 1,238.28(1 + 0.031·2) = 1,238.28(1.062) = $1,315.06.

Answer: C