Question

Chaney deposits $1435.73 into a savings account that pays a simple annual interest rate of 1.32%. How much interest will she earn after 3 years?

Answer 1

$57.61

Explanation:

First you want to take the initial deposit and add the 1.32% by multiplying $1435.73 by 1.0132, which should look like this, 1435.73(1.0132), which makes it $1454.68. Next is the tricky part, now you add 1.32% of that new number, 1454.68(1.0132) which equals $1473.88. Then add 1.32% one more time, 1473.88(1.0132) which equals $1493.34. Lastly you subtract the initial deposit from the new number, 1493.34 - 1435.73 which equals $57.61 which is the amount of interest you would gain after 3 years!

Answer 2

Answer: 56.85

Explanation:

$1435.73 x 0.0132 x 3 = 56.854908

You get the 0.0132 by using 1.32% and moving the decimals two place to the left to get 0.0132.

I took the test and got it right!