Frank invests $2,500 in an account that pays 6% simple interest. How much money will he have at the end of four years?
A) $2,650
B) $3,100
C) $3,156
D) $3,163
E) $10,600

Question

Quizplus · Accepted Answer

Simple interest is calculated using the formula $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the rate, and $t$ is the time in years. For Frank's investment, $P = $2,500$, $r = 6\% = 0.06$, and $t = 4$ years. Thus, $I = $2,500 \times 0.06 \times 4 = $600$. The total amount after 4 years is the principal plus interest, which is $P + I = $2,500 + $600 = $3,100$.

Frank Invests $2,500 in an Account That Pays 6% Simple