Tim deposited $2,500 into an account. He made no additional deposits or withdrawals. Tim earned 5.25% annual simple interest on the money in the account. What was the balance in dollars and cents in Tim’s account at the end of 5 years?

Question

Tim deposited $2,500 into an account. He made no additional deposits or withdrawals. Tim earned 5.25% annual simple interest on the money in the account. What was the balance in dollars and cents in Tim’s account at the end of 5 years?

Responses
A $3,156.25$3,156.25
B $131.25$131.25
C $656.25$656.25
D $6,562.50

Answer 1

To find the balance in Tim's account at the end of 5 years, we can use the formula for simple interest:

Balance = Principal + (Principal * Rate * Time)

The principal is $2,500, the rate is 5.25% (or 0.0525), and the time is 5 years.

Balance = $2,500 + ($2,500 * 0.0525 * 5)
= $2,500 + ($2,500 * 0.2625)
= $2,500 + $656.25
= $3,156.25

Therefore, the correct answer is A) $3,156.25.