Jane has $80,000 in a savings account. The interest rate is 2 4/5% per year and is not compounded. How much will she have in total in 3 years?
Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
$
Options:
A) $89,400
B) $95,000
C) $93,800
D) $90,400
To solve the problem, we’ll use the formula for simple interest:
[ i = prt ]
Where:
– ( p ) is the principal amount (starting amount): $80,000
– ( r ) is the interest rate as a decimal. Since the interest rate is ( 2 frac{4}{5}% ), we first convert this mixed number to an improper fraction:
– ( 2 frac{4}{5} = frac{14}{5} ) percent
– Convert this to a decimal: ( frac{14}{5} div 100 = 0.028 )
– ( t ) is the time in years: 3 years
Now, let’s calculate the interest:
1. Calculate ( i ):
[ i = 80000 times 0.028 times 3 ]
[ i = 80000 times 0.084 ]
[ i = 6720 ]
2. Now, add the interest to the principal to find the total amount:
[ text{Total} = p + i = 80000 + 6720 = 86720 ]
Since this amount does not match the options provided, let’s double-check the interest rate calculation.
Converting ( 2 frac{4}{5} ) again:
– ( 2 frac{4}{5}