Question

Old Time Savings Bank pays 3% interest on its savings accounts. If you deposit $3,000 in the bank and leave it there: (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. How much interest will you earn in the first year?

Answer 1

Interest= $90

Step-by-step explanation:

Giving the following information:

Initial investment= $3,000

i= 3%

Number of periods= 1

First, we need to calculate the future value, using the following formula:

FV= PV*(1+i)^n

FV= 3,000*1.03= $3,090

Now, the interest earned:

Interest= 3,090 - 3,000

Interest= $90