Question

Mrs. Martin deposits $2,300 into a savings account. Her account earns an interest rate of 1.5%. How much money will she have in the account after 18 months?

Answer 1

Assuming that the account earns the interest as simple interest, to calculate the amount Mrs. Martin will have after 18 months, you have to use the following formula:

$A=P(1+rt)$

Where

A is the accrued amount

P is the principal amount

r is the interest rate expressed as a decimal number

t is the time expressed as years

She deposited $2300, this is the principal amount.

The interest rate of the account is 1.5%, to express it as a decimal value you have to divide it by 100

$r=\frac{1.5}{100}=0.015$

To express the time in "years" you have to divide the given months by 12

$t=\frac{18}{12}=1.5$

Now that all values are expressed in their corresponding units, you can calculate the final balance in her account as:

$\begin{gathered} A=2300(1+(0.015\cdot1.5)) \\ A=2300\cdot1.0225 \\ A=2351.75 \end{gathered}$

After 18 months she will have $2351.75 in her account.