A bank advertises that they will pay 1.5% simple annual interest on new savings accounts. Lorenzo puts $400 in a new account. If he does not deposit or withdraw any money, how much will he have altogether after one year?

$406

Step-by-step explanation:

The formula for simple interest is I=prtI=prt where II is the amount of interest earned, pp is the initial deposit, rr is the annual interest rate, and tt is the number of years.

It is given that he deposits p=$400p=$400, the bank pays r=1.5%= 0.015r=1.5%=0.015 in annual interest, and t=1t=1 year. The amount of interest he will earn is then I=prt=400(0.015)(1)=$6I=prt=400(0.015)(1)=$6.

His total balance after one year will then be p+i=$400+$6=$406p+i=$400+$6=  

$406

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