Answer:
The interest earned during the second year of the life of a deposit of $6,000 if no money is withdrawn from the bank during that time is $153.75.
Explanation:
Since it is an annual compounding without any money withdrawn, that mean interest will be paid on both the principal and the first year interest income. Therefore, we have:
First year interest earned = Principal * Annual interest rate = $6,000 * 2.5% = $150
Second year interest earned = (Principal + First year interest earned) * Annual interest rate = ($6,000 + $150) * 2.5% = $6,150 * 2.5% = $153.75
Therefore, the interest earned during the second year of the life of a deposit of $6,000 if no money is withdrawn from the bank during that time is $153.75.
