A decision maker has D pesos and puts this amount in the bank for one year at an interest rate of r percent a year. At the end of one year, the decision maker will have A) D(1 + r) pesos B) D(1 + r)² pesos C) D(1 + r) dollars

Question

Quizplus · Accepted Answer

The formula for simple interest is I = Prt, where P is the principal (initial amount), r is the interest rate, and t is the time period. Since the time period is one year, we have I = Pr. The total amount in the bank after one year is the sum of the principal and the interest earned, which is D + I = D + Pr = D(1 + r). Therefore, the correct answer is A.

A Decision Maker Has D Pesos and Puts This Amount