Olivia deposited $800 at her local credit union in a savings account at the rate of 6.2% paid as simple interest. She will earn interest once a year for the next 7 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Olivia in 7 years? a. $1,147.20 b. $149.60 c. $1,218.88 d. $852.68

Question

Kiley Austin

Business

6 June, 16:30

Olivia deposited $800 at her local credit union in a savings account at the rate of 6.2% paid as simple interest. She will earn interest once a year for the next 7 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Olivia in 7 years? a. $1,147.20 b. $149.60 c. $1,218.88 d. $852.68

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Answers (1)

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Darwin Montoya · Answer 1

a. $1,147.20

Explanation:

Simple interest means the same amount will be paid as interest per year.

We will use the following formula to solve for Olivia's interest after 7 years.

Interest = principal * interest rate * time

Principal = $800

Interest rate = 6.2%

Time = 7 years

Interest = 800 * 0.062 * 7

Interest = $347.20

So the total money owed to Olivia is = 800 + 347.20 = $1,147.20