Dev puts £800 in an account paying 5% simple interest per year. How much is in the account after 3 years?
Answer and explanation
Correct answer: C. £920.00
- Step 1: Simple interest each year is 5% of £800 = £40. Step 2. Over 3 years the interest is 3 × £40 = £120. Step 3. £800 + £120 = £920. Answer: £920.00. Why not the others: £120.00: This is the interest only, not the total in the account. £926.10: This calculates compound interest, but the question says simple interest. £840.00: This adds only one year of interest.
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