question archive After several years of working, Katy has savings of $100,000
After several years of working, Katy has savings of $100,000
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After several years of working, Katy has savings of $100,000. If she invests that $100,000 in a savings fund that adds 5% each year, about how much will her savings account have after 20 years? Ignore compounding and taxes, and assume Katy puts no additional money into savings.
A. $105,000
B. $120,000
C. $150,000
D. $200,000
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Answer:
D. $200,000
Step-by-step explanation
Since compounding is to be ignored , formula for simple interest is :
I = P?×?r?×?t
here ,
P = principal value(initial amount) ,
r = interest rate ,
t = time
So ,
I = $100,000 ?×? 5% ?×? 20 = $100,000 ?×? (5/100) ?×? 20 = $100,000
Total amount after 20 years = principal + interest = $100,000 + $100,000 = $200,000
