10. a new bank customer with $3,000 wants to open a money market account. the bank is offering a simple…
10. a new bank customer with $3,000 wants to open a money market account. the bank is offering a simple interest rate of 1.1%.\na. how much interest will the customer earn in 20 years?\nb. what will be the account balance after 20 years?
Answer
Explanation:
Step1: Identify the formula for simple interest
The formula for simple interest is $I = Prt$, where $P$ is the principal amount, $r$ is the interest rate (in decimal form), and $t$ is the time in years. Given $P=$3000$, $r = 1.1%=0.011$, and $t = 20$ years.
Step2: Calculate the interest (part a)
Substitute the values into the formula: $I=3000\times0.011\times20$ First, calculate $3000\times0.011 = 33$. Then, $33\times20=660$.
Step3: Calculate the account balance (part b)
The account balance $A$ is the sum of the principal $P$ and the interest $I$. The formula is $A=P + I$. We know $P = 3000$ and $I = 660$. So, $A=3000+660=3660$.
Answer:
a. The customer will earn $$660$ in interest. b. The account balance after 20 years will be $$3660$.