A bank offers a 5% annual interest rate for a savings account. Perry puts $2,600 into an account to save for college. How much will be in the account after a year?
Mathematics · Middle School · Thu Feb 04 2021
Answered on
Given:
Principal amount ( P ) = $2,600
Interest rate ( r ) = 5% or 0.05 (divided by 100)
Term ( t ) = 1
Find the future value.
Formula for Simple Interest
A = P ( 1 + rt )
Solution:
Substitute the given values of r,t and P to the formula for simple interest.
A = P ( 1 + rt )
A = $2,600( 1 + (1)(0.05))
A = $2,600( 1 + 0.05)
A = $2,600( 1.05)
A = $2,730
Final answer:
The amount after 1 year is $2,730.