Question

Old time savings bank pays 4% interest on its savings accounts. if you deposit $1,000 in the bank and leave it there: (do not round intermediate calculations. round your answers to 2 decimal places.)
a. how much interest will you earn in the first year?
b. how much interest will you earn in the second year?
c. how much interest will you earn in the 10th year?

Answer 1

Answer:

a. $40, because you would do 1,000 × 1.04 = $1,040, and then subtract the original $1,000.

b. $41.60, because 1,000 × 1.04² = 1,081.6 - $1,040 = $41.60

Step-by-step explanation:

Answer 2

A. $40, because you would do 1,000 × 1.04 = $1,040, and then subtract the original $1,000.
b. $81.60, because 1,000 × 1.04² = 1,081.6
c. $480.24, because 1,000 × 1.04^10 = 1,480.24.
I have used the formula for compound interest presuming you were aware of it, but I will be happy to explain what I did if you want :).
I hope this helps!