Question

A high-interest savings account pays 5.5% interest compounded annually. If $300 is deposited initially and again at the first of each year, how much do money do you get in one year?

Answer 1

$316.50

Explanation:

We have been given that a A high-interest savings account pays 5.5% interest compounded annually. $300 is deposited initially and again at the first of each year.

We will use compound interest formula to solve our given problem.

`A=P(1+(r)/(n))^(nt)`, where,

A = Final amount,

P = Principal amount,

r = Interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years.

`5.5\%=(5.5)/(100)=0.055`

`A=\$300(1+(0.055)/(1))^(1*1)`

`A=\$300(1+0.055)^(1)`

`A=\$300(1.055)`

`A=\$316.50`

Therefore, you will get $316.50 in one year.