You put $1,000 into your bank account with a 5% annual simple interest rate. How much money will you have after three years?
To calculate the amount of money you will have after three years with a 5% annual simple interest rate, you can use the formula:
\( A = P(1 + rt) \)
Where:
A = Final amount
P = Principal amount (initial deposit)
r = Interest rate (expressed as a decimal)
t = Time period (in years)
In this case, your initial deposit (P) is $1,000, the interest rate (r) is 5% (or 0.05 as a decimal), and the time period (t) is 3 years.
Substituting the values into the formula, we get:
\( A = 1000(1 + 0.05 \times 3) \)
Now let's calculate the solution step by step:
\( A = 1000(1 + 0.15) \)
\( A = 1000 \times 1.15 \)
\( A = 1150 \)
Therefore, after three years, you will have $1,150 in your bank account.