Question

William wants to invest $30,000 in a mutual fund.

a) Bank A has an annual interest rate of 6.5% for 5 years. How much money will he have

at the end of the 5 years? $

Answer 1

Answer:

He will have $39,750 at the end of five years.

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

$T = E + P$

In this question:

$P = 30000, I = 0.065, t = 5$

Interest earned:

$E = P*I*t = 30000*0.065*5 = 9750$

Total amount:

$T = E + P = 9750 + 30000 = 39750$

He will have $39,750 at the end of five years.