Question

Marty placed $4000 into an account earning 4% simple interest. At the end of the year he moved the total amount to a new account earning 5% interest. Determine the amount of money Marty would have at the end of the second year.

Answer 1

$4,368

Explanation:

At the beginning of the first year, the principal (amount deposited) is $4000 at 4% interest.

The rate of interest in decimal is r = 4%/100 = 0.04

Interest for 1 year = P x r = 4000 x 0.04 = $160

So at the end of the first year, Marty's 4000 deposit will have grown to $4,000 + $160 = $4, 160

He deposits this amount into a new account at 5% interest
Interest rate r = 5%/100 = 0.05
Interest = 4160 x 0.05 = $208.00

Total money at the end of the second year = 4160 + 208 = $4,368

Answer 2

$50400

Explanation:

5/100*4000=200+4000=4200*12=50400