Question

If the APY of a savings account is 2.6% and if the principal in the savings account was $2400 for an entire year, what will be the balance of the savings account after all the interest is paid for the year?

Answer 1

The answer is $2462.40

Answer 2

$2462.40

Explanation:

We have been given that the APY of a savings account is 2.6% and the principal in the savings account was $2400 for an entire year.

To find the balance of the savings account after all the interest is paid for the year, we will use compound interest formula.

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

A= Final amount after T years.

P= Principal amount.

r= Interest rate in decimal form.

n= Period of compounding.

T= Time in years.

`2.6\text{ percent}=(2.6)/(100)=0.026`

Upon substituting our given values in above formula we will get,

`A=2400*(1+(0.026)/(1))^(1*1)`

`A=2400*(1+0.026)^(1)`

`A=2400*1.026`

`A= 2462.40`

Therefore, the balance of the savings account after all the interest is paid for the year will be $2462.40.