Question

If a deposit is made for $125,000.00 in a Money Market Savings Account at a simple interest rate of 1.89%, what would be the ending balance after6 years? Make sure to include dollar ($) sign and comma (,) after thousands place. 3

Answer 1

We have to find the interest amount first. To do this, we find the 1.89% of the initial amount:

`i=125,000.00*(1.89)/(100)=125,000.00*0.0189=2361.5`

That's the annual interest. If it's add up for 6 years, then the total interest is:

`i_T=i*6=2,361.5*6=14,175.00`

Finally we add this total interest to the initial amount:

`b=125,000.00+14,175.00`

The ending balance is $139,175.00