Question

You deposit $1000 in an account that earns 2.5% per year simple interest. The equation that represents this situation is:

A(n) = 1000 + (n – 1)(0.025 • 1000)

How much will you have in the account at the beginning of the 4th year? Round your answer to the nearest dollar.
A. $3250
B. $1088
C. $1163
D. $1075

Answer 1

The answer is $1075. The way to figure this out is to plug in 4 for n, which represents the number of years. A(4) = 1000 + (4 - 1) * (0.025 * 1000) A(4) = 1000 + 3 * 25 = $1075