# Calculate Maturity Value for a Simple Interest Account

by Hanis
(Malaysia)

##### Question
Razifah deposited \$2000 in an account at rate of 3.75% simple interest. 8 months later, she deposited another \$3000 into account. Find the total amount in the account three years after the first deposit.

##### Answer
After understanding the question, it is better to split the solution into two parts before we can get the answer. These parts are:

1) Find the total amount after 8 months
2) Find the total amount for the rest of the period

Since we are finding the total amount, we can use the maturity value formula shown below:

You can see the lesson on simple interest to learn more about this formula.

1) Find the total amount after 8 months.

It is important to know that the interest 3.75% is on per year basis (or per annum) unless stated otherwise. Therefore, it is important to convert 8 months to years. Since 1 year consists of 12 months, we divide 8 months with 12. Here's how:

Next, we need to convert 3.75% to a decimal by dividing it with 100. Here's how:

Alright, we are all set to calculate the total amount in the account after 8/12 year. These are the information that we have:
1. Principal, P = \$2000
2. Interest rate, r = 0.0375
3. Duration/Period, t = 8/12
Substituting these values into the maturity value formula:

Hence, after 8 months, the total amount in the account is \$2050. Let's go to the second part:

2) Find the total amount for the remaining period

Now, after covering the first 8 months. Let's find the maturity value for the rest of the remaining period. Since, 3 years has 36 months (3 x 12), the:
Next, we have to convert 28 months to year by dividing it with 12:

Razifah deposit another \$3000 into her account. Therefore, the amount of money in her account after 8 months will be:
Hence, we have the following information:
1. Principal, P = \$5050
2. Interest rate, r = 0.0375
3. Duration/Period, t = 28/12
We can calculate for the maturity value after 3 years using the above information. This is shown below:

Therefore, the total amount in the account three years after the first deposit is \$5491.88.

### Comments for Calculate Maturity Value for a Simple Interest Account

Average Rating

 Aug 05, 2014 Rating WRONG CALCULATION by: Anonymous The correct answer is : RM5487.50. First part is the calculation of S on P= 2000 at 3.75% for 3 years which is the answer is RM2225. second part is the calculation of S on p=3000 at 3.75% for 28/12 years which is the answer is RM3262.50. This is because the definition of simple interest is : the calculation of interest should always based on the original principal. tq

 Dec 23, 2011 Rating good by: aravind i pay the post office rd monthly 500 . after 3 years how much interest ,net total amount, interest percentage how? i need .please mail me calculate amount ? mail id: fivestarschool@gmail.com

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