Question

Timothy put $300 in a bank that pays 7% interest rate, if he leaves his interest from the first year in the bank, how much money will he have in total after 2 years?

Answer 1

Answer: he would have $343.47 after 2 years.

Step-by-step explanation:

if he leaves his interest from the first year in the bank, we would assume that his interest was compounded. We would apply the formula for determining compound interest which is expressed as

A = P(1+r/n)^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $300

r = 7% = 7/100 = 0.07

n = 1 because it was compounded once in a year.

t = 2 years

Therefore,.

A = 300(1 + 0.07/1)^1 × 2

A = 300(1.07)^2

A = $343.47