Question

Your savings account pays 4 percent per year: Each $100 in the bank grows to $104 over a 1-year period. If prices increase by 3 percent per year, by keeping $100 in the bank for a year you gain $ .

Answer 1

$1

Step-by-step explanation:

Given:

Interest paid per year = 4%

Amount invested = $100

Amount received after the year = $104

Increase in prices = 3%

Therefore,

the price of $100 after one year = $100 + 3% of $100 = $103

now,

The gain = Amount after the interest - The price after the increase

or

The gain = $104 - $103

or

The gain = $1