Multiple choice

John wants to buy a new laptop. To save for the purchase, he invests $8,000 at a simple annual interest rate of 5%. What will be the value of the investment after 4 months?

  1. $8,133
  2. $8,250
  3. $8,275
  4. $8,300
  5. $8,350
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Simple interest is calculated as I = P * r * t. Here, P = 8000, r = 0.05, and t = 4/12 = 1/3 years. Thus, I = 8000 * 0.05 * (1/3) = 400 / 3 = 133.33, making the total value 8133.33, which rounds to 8133.

AI explanation

Using the simple interest formula for 4 months, which is one third of a year, the interest earned is calculated as (8000 multiplied by 5 multiplied by 1/3) divided by 100, resulting in approximately \$133.33. Adding this interest to the original principal of \$8,000 gives a total value of approximately $8,133.

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