The depositor scenario extends to two years. After two years, what is the account balance if the principal is $9,000 and the annual simple interest rate is 6%?

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Multiple Choice

The depositor scenario extends to two years. After two years, what is the account balance if the principal is $9,000 and the annual simple interest rate is 6%?

Explanation:
With simple interest, the interest each year is based only on the original principal. The yearly interest on 9,000 at 6% is 9,000 × 0.06 = 540. Over two years, total interest earned is 540 × 2 = 1,080. Add that to the principal to get the balance: 9,000 + 1,080 = 10,080. The account balance after two years is $10,080. The other amounts come from misapplying time or rate (for example, one year’s interest would give 9,540; using a higher rate would push the total higher).

With simple interest, the interest each year is based only on the original principal. The yearly interest on 9,000 at 6% is 9,000 × 0.06 = 540. Over two years, total interest earned is 540 × 2 = 1,080. Add that to the principal to get the balance: 9,000 + 1,080 = 10,080. The account balance after two years is $10,080. The other amounts come from misapplying time or rate (for example, one year’s interest would give 9,540; using a higher rate would push the total higher).

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