Sydney invested $10,000 for an indefinite period at 5% per year. At the end of each year, she receives a a $500 check for interest earned. This type of account pays simple interest.

Question

Quizplus · Accepted Answer

Simple interest means the interest is calculated based on the original principal amount, so the annual interest of $500 indicates that the account has a principal balance of $10,000 x 5% = $500. Therefore, Sydney will continue to receive $500 interest each year until she decides to withdraw or close the account.

Sydney Invested $10,000 for an Indefinite Period at 5% Per