Sam deposits $18,000 each year into a retirement account with a 3.5% simple interest rate. If he deposits the same amount each year, how much money will he have at the end of his fourth year?
Mathematics · Middle School · Sun Jan 24 2021
Answered on
Given:
Principal amount ( P ) = $18,000
Interest rate ( r ) = 3.5% or 0.035 (divided by 100)
Term ( t ) = 4
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 = $18,000 ( 1 + (0.035)(4))
A = $18,000 ( 1 + (0.035)(4))
A = $18,000 ( 1.14 )
A = $20,520
Final answer:
The value after 4 years is $20,520.