Question

A new bank customer with 4,500 wants. To open a money market account the bank is offering a simple interest rate of 1.6

Answer 1

Answer:

a) $780

b) $5,220

Step-by-step explanation:

The formula for simple interest is the following

A = P (1 + rt)  ... where

A = final amount

P = initial principal balance

r = annual interest rate

t = time (in years)

If we apply the values to the formula for 10 years we get the following...

A = 4,500 * (1 + (0.016 * 10))

A = 4,500 * (1 + 0.16)

A = 4,500 * 1.16

A = 4,500 * 1.16

A = 5,220

Therefore the final amount in the bank account is 5,220 and the interest gained would be

5,220 - 4,500 = $720