Question

Nicole deposits $2,136 in a savings account paying 5.36% interest. To the nearest dollar, how much money does Nicole have in total after nine years?
a.
$213
b.
$1,030
c.
$1,272
d.
$3,166

Answer 1

If the interest is simple (not compounded):

A = P(1 + rt) = 2136[1 + 0.0536(9)] = 2136(1 + 0.4824) = 2136(1.4824) ≈ 3166.41.

To the nearest dollar: $3,166 — answer (d).

(If the rate were compounded annually the amount would be 2136(1.0536)^9 ≈ $3,416.)