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# question on interest rates

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If you had money in a savings account earning 9% interest per annum, how much would you make in interest on a deposit of 60.00 over two years?

Mar 21, 2021

#1
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Since the amount earned is 9% per year, you would earn 5.4 in the first year because 60*(9/100)

This tells us that after the first year, you have 65.4 dollars in your account.

Now, the amount you would earn in the second year is 3.924 because 65.4*(9/100)

Finally,

interest in first year + interest in second year = total

5.4 + 3.924 = 9.324

Since we are dealing with money, the smallest unit is a penny, which is the hundredth place. Rounding, you get 9.32

Note: I do all my calculations by hand you might want to check the answer.

Sorry if my answer is wrong.

Mar 21, 2021
#3
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3.924 because 65.4*(9/100)        <=========    might check this calculation ANH .....

Guest Mar 21, 2021
#2
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If it just SIMPLE interest:

60 x .09 x 2 = \$ 10.80

If the interest is COMPOUNDED annually (meaning it is added to your balance and gains interest the second year):

60 ( 1+.09)2  - 60 = ~ ~ \$11.29

Mar 21, 2021
#4
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60 x (1+0.09)^2

= 60 x (1.09)^2

= 60 x 1.1881

= 71.286

71.286 rounds to 71.29.

71.29 - 60 = 11.29.

You would make \$11.29.

Mar 21, 2021