Question

Which of the following best describes the amount of money you'll have if you put $1000 into a savings account earning 1% annual compound interest for 10 years?

A) More than $1100
B) Exactly $1100
C) Less than $1100
D) Exactly $1000

Answer 1

The amount of money you'll have after 10 years with 1% annual compound interest on a $1000 deposit is approximately $1104.62, which is more than $1100.

Step-by-step explanation:

To calculate the amount of money you'll have in a savings account with compound interest, you can use the formula: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount (initial deposit), r is the annual interest rate (expressed as a decimal), n is the number of times interest is compounded per year, and t is the number of years. In this case, P = $1000, r = 1% (0.01), n = 1 (compounded annually), and t = 10 years.

Plugging the values into the formula: A = 1000(1 + 0.01/1)^(1*10) = 1000(1.01)^10 = $1000(1.10462213730) ≈ $1104.62.

Therefore, the amount of money you'll have after 10 years with 1% annual compound interest on a $1000 deposit is approximately $1104.62, which is more than $1100.