Stella deposits $5 000 in a savings account at a bank that offers interest of 5.5% on such accounts. What is the value of the money in her savings account in one year's time?
A)$5 275
B)$5 135
C)$4 739
D)$7 750

Question

Quizplus · Accepted Answer

To find the value of Stella's savings account after one year, we need to calculate the interest earned on the initial deposit of $5,000. Using the formula for simple interest, we have:

Interest = Principal x Rate x Time

where Principal is the initial deposit, Rate is the interest rate, and Time is the length of time in years.

Plugging in the given values, we get:

Interest = $5,000 x 0.055 x 1 = $275

Therefore, the value of Stella's savings account after one year is:

Value = Principal + Interest = $5,000 + $275 = $5,275

So, the best choice is A, with an explanation as shown above.

Stella Deposits $5 000 in a Savings Account at a Bank