Question

Retta put $100 USD in a bank account that gains 20% interest annually. If Retta withdraws $25 in year 3, what will her balance be in year 4?

Answer 1

The balance in Retta’s account can be calculated as follows:

After the first year, the balance will be $100 + 20% of $100 = $120.

After the second year, the balance will be $120 + 20% of $120 = $144.

In the third year, Retta withdraws $25, so the balance becomes $144 - $25 = $119.

After the fourth year, the balance will be $119 + 20% of $119 = $142.8.

So, at the end of year 4, Retta’s balance will be $142.8.