Answer to Question #89098 in Financial Math for Nic

Question

To be able to go on a trip to South America, Keiko decides to save for 4 years. She opens a savings account with $200. The account pays simple interest at an annual rate of 2%. She doesn't make any more deposits.
Answer the following questions. If necessary, refer to the list of financial formulas.

Answer 1

If Keiko decides to save for 4 years, and opens a savings account with $200 which pays simple interest at an annual rate of 2%, then the future value after 4 years is:

FV = 200×(1 + 0.02×4) = $216.