Lucas spends $83.42 in additional interest and charges on monthly payments as the result of a prior bankruptcy. if lucas been able to save this money for the year and then put it into a savings account earning 1.8% simple interest, how much money could he have in savings after 3 more years? a. $1,649.72 b. $1,055.10 c. $1,019.06 d. $1,001.04 please select the best answer from the choices provided a b c d

Simple interest is interest calculated on the principal portion of a loan or the original contribution to a savings account. Simple interest does not compound, meaning that an account holder will only gain interest on the principal, and a borrower will never have to pay interest on interest already accrued.

How to solve?

We have,

Amount spent each month = $83.42

Interest rate, r = 1.8% = 0.018

Time, n = 3 years

Now,

The total amount collected at the end of the year = $83.42 × 12 = $1001.04

The value of the amount deposited in the bank after 3 years will be

Future value = Present value × ( 1 + r )ⁿ

on substituting the respective values,

we have

Future value = $1001.04 × ( 1 + 0.018 )³

or

Future value = $1,056.07

Hence,

The money he could have at the end of 3 more years will be $1,055.17

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