Question

Margo deposited $100 into a savings account earning 4.5% simple annual interest. At the end of each year, she adds $100 to her account. Fill in the table below to figure out how much money was in Margo's account at the end of 3 years.

Answer 1

principal interest total money in account

at the end of year

Year one $100 $4.5 $104.5

year two $200 $ 9 +$4.5 $ 213.5

year three $300 $ 9 +$4.5 + $13.5 $ 327

Explanation:

Simple interest for any principal is given by

I = p* r* t/100

I = interest rate accrued on principle amount

p is the amount deposited

r is the rate of interest

t is the time period of saving

_______________________________________________

For year one

p = $100

r = 4.5%

t=1

I = 100*4.5*1/100 = 4.5

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For year two $100 more is added to already existing $100 in account.

p = 100 +100 = $200

r = 4.5%

t=1

I = 200*4.5*1/100 = 9

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For year two $100 more is added to already existing $200 in account after two years.

p = 100 +100 +100 = $300

r = 4.5%

t=1

I = 300*4.5*1/100 = 13.5

_______________________________________________

There fore total money in Margo account is

$300 saving deposited by her

$4.5 + $9 + $13.5 = $27 (interest accrued in three time)

Formulating the results in tabular form

principal interest total money in account

at the end of year

Year one 100 4.5 104.5

year two 200 9 +4.5 213.5

year three 300 9 +4.5 + 13.5 327