Question

Mary invests $800 into a high interest savings account. In the first year, the value of her saving increases by 8%. In the second year, there is a further increase of 8%. What is the total value of her investment after two years? Round your answer in dollars and cents to the nearest cent. Do not include commas or the dollar sign in your answer. For example, if your answer is $1,237.12, enter 1237.12.

Answer 1

The Total value after 2 years=933.12

Explanation:

The total value of Mary's investment after two years can be expressed as;

Total value=(Initial investment+Interest)

where;

For the first year,

Initial investment=$800

Interest=Initial investment×interest rate×time

where; Initial investment=800, Interest rate=8%, time=1 year

replacing;

Interest=800×(8/100)×1=$64

Interest=$64

Total value after 1 year=(800+64)=$864

For the second year,

Initial investment=$864

Interest=Initial investment×interest rate×time

where; Initial investment=864, Interest rate=8%, time=1 year

replacing;

Interest=864×(8/100)×1=$69.12

Interest=$69.12

Total value after 2 years=(864+69.12)=$933.12

The Total value after 2 years=933.12