jmc

Question

When Frederick was born, his grandparents gave him a gift of 2000, which was invested at a simple interest rate of 5% per year. How much money will Frederick have when he can collect the money at the age of 18$? (Assume no money is added to the account besides the interest.)

Accepted Answer

If the interest is simple, then Frederick's money grows by .05(2000)=100 dollars per year. This means he gained 18100=1800, so he has a total of 2000+1800=3800.