Question

Wanda placed $100 in a savings account that pays 2% simple interest per year. After 6 months Wanda made another deposit of $100. How much money will be in her account at the end of one year​

Answer 1

`\$203.01`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

After 6 months

`t=6/12=0.5\ years\\ P=\$100\\r=2\%=2/100=0.02`

substitute in the formula above

`A_1=100(1+0.02*0.5)`

`A_1=100(1.01)`

`A_1=\$101`

At the end of one year

`t=6/12=0.5\ years\\ P=A_1+\$100=\$101+\$100=\$201\\r=2\%=2/100=0.02`

substitute in the formula above

`A_2=201(1+0.02*0.5)`

`A_2=201(1.01)`

`A_2=\$203.01`