ACT Math · Ratios, rates, and percents
An account earns simple interest at an annual rate of 4%. If $2,000 is deposited and left for 3 years with no withdrawals, what is the…
An account earns simple interest at an annual rate of 4%. If $2,000 is deposited and left for 3 years with no withdrawals, what is the total amount in the account after 3 years?
Answer and explanation
Answer: B: $2,240
Simple interest: I = Prt = 2000(0.04)(3) = 240. Total = principal + interest = 2000+240 = 2240. Choice D applies compound interest instead of simple interest. Choice A computes only one year's interest.
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