Kurt invests $1,000 at a 10% rate of return for twenty years. The return is based on simple interest that is paid at the end of each year. Which one of the following is correct?
A) Kurt will receive more interest in year twenty than in year one.
B) Kurt will receive the same amount of interest each year.
C) Kurt will not receive any interest for the first year.
D) Kurt will receive less interest in year twelve than in year eight.
E) Kurt will receive interest on both the principal and year one's interest in year two.

Question

Quizplus · Accepted Answer

Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid. Therefore, Kurt will receive the same amount of interest each year.

Kurt Invests $1,000 at a 10% Rate of Return for Twenty