Question

A savings account grows by 3% each year. Sofia places $500 in the account at the beginning of the year. (a) How much does Sofia have at the end of the year once her $500 has been increased by 3%?
(b) How much does Sofia have at the end of the second year based on increasing your answer from part (a) by 3%?
(c) Did the amount of money in Sofia's account grow faster the first year or the second year? Explain how you arrived at your answer.

Answer 1

Answer:

a) $515

b) $530.45

c) The amount grew faster in the second year. Because after each year, the amount she has increase, and then the 3% will be applied over a higher amount than before, generating more profit than the previous year.

Step-by-step explanation:

a)

After one year, the amount increased is 3% of the inicial value, so it is 0.03 * 500 = $15

So Sofia has 500 + 15 = $515 at the end of the year.

b)

After the second year, the amount will increase by 3%, but now the amount is 515, so we have 0.03 * 515 = $15.45

So Sofia has 515 + 15.45 = 530.45 at the end of the second year.

c)

The amount grew faster in the second year. Because after each year, the amount she has increase, and then the 3% will be applied over a higher amount than before, generating more profit than the previous year.