An account is opened with an initial balance of $950 and a simple annual interest rate of 1.6%. What is the balance after 5 years
Question
Question
An account is opened with an initial balance of $950 and a simple annual interest rate of 1.6%. What is the balance after 5 years
the answer is $1,026.
Solving: Use Simple interest formula, I=Prt.
Make the rate into a decimal (1.6% -> 0.016)
plug in the numbers into the formula. 950 x 0.016 x 5 = 76$.
76$ will be our interest, now to find the balance we would have to add the the starting money (950) with our interest (76$), resulting in our answer of $1,026 after 5 years.
$1,026. This is because $950 multiplied by 1.6% is equal to $15.20. This multiplied by 5 years is equal to $76. $950 multiplied by $76 is equal to $1,026.