Jonathan invested $6,220 in an account that pays 11 percent simple interest. How much money will he have at the end of 40 years?

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BlackTom AI · Accepted Answer

First, let's identify the key givens and the formula we should use. The problem involves simple interest, with principal P = 6,220, annual rate r = 11% (0.11), and time t = 40 years. The simple interest formula is I = P × r × t, and the amount accumulated at the end is A = P + I.

Option A: $106,905. This number is far larger than what you get from straightforward calculation. If we reverse-engineer, it would imply an interest of about $100,685, which would require a much higher rate or time than provided. Since r × t = 0.11 × 40 = 4.4, the growth factor is 4.4, and adding back the original principal would yield 6,220 × (1 + 4.4) = 6,220 × 5.4, which equals $33,588, not $106,905. Therefore, this option is incorrect.

Option B: $404,305. This value would correspond to a very large growth over 40 years under simple interest, far exceeding the correct calculation. Using the correct growth factor 5.4 for the amount (1 + rt), we get 6,220 × 5.4 = 33,588. The suggested total of 404,305 is inconsistent with simple interest for the given rate and time, so this option is incorrect.

Option C: $408,671. Similar to Option B, this figure implies an excessive accumulation for simple interest with the given parameters. The correct accumulation factor is 1 + rt = 1 + 4.4 = 5.4, leading to 6,220 × 5.4 = 33,588. Therefore, this option is also incorrect.

Option D: $33,588. This matches the correct computation exactly. Compute interest: I = 6,220 × 0.11 × 40 = 6,220 × 4.4 = 27,368. Then total A = P + I = 6,220 + 27,368 = 33,588. This aligns with the simple-interest formula and the given values, so this option is correct.

33:390:300:13 FINANCIAL MANAGEMENT Exam 1- Requires Respondus LockDown Browser

Jonathan invested $6,220 in an account that pays 11 percent simple interest. How much money will he have at the end of 40 years?

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