Multiple choice

Emily deposits $3,500 into a bank account offering 4% annual simple interest. However, she decides to withdraw half the amount after 2 years. How much interest will she have earned by then, and what is the total balance in her account after this withdrawal?

  1. Interest: \$140; Total balance after withdrawal: \$1,820
  2. Interest: \$240; Total balance after withdrawal: \$1,870
  3. Interest: \$260; Total balance after withdrawal: \$1,880
  4. Interest: \$280; Total balance after withdrawal: \$1,890
  5. Interest: \$300; Total balance after withdrawal: \$1,900
Reveal answer Fill a bubble to check yourself
D Correct answer
AI explanation

Using the simple interest formula, the interest earned over 2 years on the initial deposit is 3500 times 4 times 2 divided by 100, which equals \$280. The total account balance before any withdrawal is the principal plus this interest, totaling 3500 + 280 = \$3,780. When Emily withdraws half of the total balance, the remaining amount is 3780 divided by 2, which leaves a final balance of $1,890.

Keep practicing — related questions