Question

Katie deposits $650 in a bank that pays 6.2% annual interest (simple interest) How much will katie have in her bank account after 5 years?

Answer 1

From the details provided in the question, the principal amount invested (deposited) is 650. The annual rate of interest is 6.2% (that is 0.062), and the duration which is time in years is 5. The simple interest formula is given as;

$\begin{gathered} SI=\text{PRT} \\ SI=650\times0.062\times5 \\ SI=201.5 \end{gathered}$

If the amount deposited now yields an interest of 201.5 after 5 years, then the amount in Katie's account would be;

$\begin{gathered} A=P+SI \\ A=650+201.5 \\ A=851.5 \end{gathered}$

After 5 years, Katie is going to have $851.5 in her bank account