A new bank customer with $5,000 wants to open a money market account. The bank is offering a simple interest rate of 1.8%.

A new bank customer with $5,000 wants to open a money market account. The bank is offering a simple interest rate of 1.8%. a. How much interest will the customer earn in 10 years? b. What will the account balance be after 10 years?

solution

a) The simple interest SI [tex]= P*R*T[/tex]

Where P is the principal amount

R is the rate of interest and

T is the time period

Substituting the given values, we get -

SI

[tex]= 5000 *\frac{1.8}{100} *10\\= 900[/tex] dollars

b) Amount is the sum of Principal and simple interest

[tex]A = 5000 + 900 = 5900[/tex] dollars

A new bank customer with ​$5,000 wants to open a money market account. The bank is offering a simple interest rate of ​1.8%.

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A new bank customer with $5,000 wants to open a money market account. The bank is offering a simple interest rate of 1.8%.