Question

3. Vivian has a balance of $1,075 in a savings account that pays 3.25% interest compounded annually. If Vivian makes no deposits or withdrawals, how much money will be in her saving account after 24 months?​

Answer 1

$1146.01

Explanation:

The original amount is 100%. The account earns 3.25% per year, so after 1 year it is worth 100% + 3.25% = 103.25% of the original amount. Since the interest is compounded, after the second year, the account is worth 103.25% of the amount at the end of the first year.

$1,075 * 1.0325 * 1.0325 = $1146.01