You invest $20,000.It earns simple interest at 7% for the first 5 months and 8% for the next 3 months.What is the accumulated value at the end of 8 months?
A)$20,998.06
B)$20,995.00
C)$20,986.30
D)$20,983.33

Question

Quizplus · Accepted Answer

The accumulated value is calculated by adding the interest earned in each period to the principal. For the first 5 months at 7% simple interest, the interest is $20,000 * 0.07 * (5/12) = $583.33. For the next 3 months at 8% simple interest, the interest is $20,000 * 0.08 * (3/12) = $400. Adding these to the principal gives $20,000 + $583.33 + $400 = $20,983.33.

You Invest $20,000