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You just inherited $225,000. You are investing this money for 5 years at 6.25% simple interest. ...

Question:

You just inherited $225,000. You are investing this money for 5 years at 6.25% simple interest.

In whole dollars, how much money will you have at the end of 5 years?

Simple Interest:

Interest expense is computed by multiplying the principal, interest rate and the time. In simple interest, only the principal account earn interest. Therefore, the amount of interest from period to period is the same, as long as there are no changes in principal, rate and time.

Answer and Explanation:

Principal 225,000
Interest Rate 6.25%
Annual Interest 14,062.50
Number of Years 5
Total Interest 70,312.50
Principal 225,000
Total Value 295,312.50

Learn more about this topic:

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How to Calculate Interest Expense: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 18
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