Question

Western savings offers three-year term deposits at 2.25?

Answer 1

Yes, Western Savings offers three-year term deposits at a competitive rate of 2.25%.

Step-by-step explanation:

Western Savings' three-year term deposit with a 2.25% interest rate provides an attractive option for savers looking for a secure and steady return on their investment. The interest rate, expressed as a percentage, signifies the annual interest earned on the deposited amount over the three-year period. In this case, the 2.25% rate applies annually, contributing to the overall growth of the investment.

To calculate the total interest earned over the three-year term, we can use the formula for compound interest:

`\[A = P * (1 + (r)/(n))^(nt),\]`

where:

- A is the future value of the investment,

- P is the principal amount (initial deposit),

- r is the annual interest rate (as a decimal),

- n is the number of times interest is compounded per year, and

- t is the number of years.

Given that the interest is compounded annually n = 1, and we want to find the total amount after three years, the formula simplifies to:

`\[A = P * (1 + r)^t.\]`

Using this formula, one can determine the total amount accrued over the three-year period, considering the principal amount and the 2.25% annual interest rate.

In summary, Western Savings' offer of a three-year term deposit at 2.25% presents a promising opportunity for investors seeking a stable and competitive return on their savings. The calculation of compound interest further illustrates the potential growth of the investment over the specified period.