Question

Jorge deposited $1,000 into an account three years ago. The first two years he earned 5 percent interest; the third year he earned 6 percent interest. How much money does Jorge have in his account today?

a. $1,157.90
b. None of the above are correct to the nearest cent.
c. $1,168.65
d. $1,176.00

Answer 1

Jorge has $1,168.65 in his account today after depositing $1,000 and earning 5% interest for the first two years and 6% interest in the third year. Therefore correct option is C

Step-by-step explanation:

The question asks how much money Jorge has in his account today after depositing $1,000 three years ago with varying interest rates for the first two years and the third year. To calculate this, we need to apply the compound interest formula for each year separately because the interest rates differ.

For the first two years at 5% interest, the calculation is as follows:

Year 1: $1,000 × (1 + 0.05) = $1,050

Year 2: $1,050 × (1 + 0.05) = $1,102.50

For the third year at 6% interest, the calculation is:

Year 3: $1,102.50 × (1 + 0.06) = $1,168.65

Therefore, the correct answer is c. $1,168.65.