Julieta invests money in an account paying a simple interest of 5% 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 calculate the total balance in a year with simple interest, Julieta should consider her initial investment and the interest earned over the year.

The formula for calculating the total amount \( A \) in an account with simple interest is:

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

where:

• \( P \) is the principal amount (initial investment),
• \( r \) is the rate of interest (as a decimal),
• \( t \) is the time the money is invested for (in years).

For Julieta, the interest rate is 5%, which is \( r = 0.05 \) when expressed as a decimal, and the time period \( t \) is 1 year. Plugging these values into the formula, we have:

\[ A = P(1 + 0.05 \times 1) = P(1 + 0.05) = P(1.05) \]

Thus, to find her total balance in one step after one year, Julieta should multiply her current balance by \( 1.05 \).