Question

Ryan placed $1,000 in a savings account which compounds interest annually at a rate of 2.5%. How much will he have in the account after 2 years?

Round your answer to the nearest dollar.

Answer 1

$951

Explanation:

First year:

$1000 - 2.5% = $1000 - $1000*0.025

$1000 - 2.5% = $1000 - $1000*(1/4)*(1/10)

$1000 - 2.5% = $1000 - $250*(1/10)

$1000 - 2.5% = $1000 - $25

$1000 - 2.5% = $975

Second year:

$975 - 2.5% = $975 - $975*0.025

$975 - 2.5% = $975 - $975*(1/4)*(1/10)

$975 - 2.5% = $975 - $24

$975 - 2.5% = $951