Question

Georgie put $500 in her savings account, earning interest at a rate of 4% each year. She did not make any more deposits or withdrawals. a) How much money was in the account after one year? b) How much money was in the account after 4 years? c) Was the amount of money earned in interest the same or different each year?

Answer 1

a) $520

b) $580

c) Interest amount is same each year

Explanation:

Given - Georgie put $500 in her savings account, earning interest at a rate of 4% each year. She did not make any more deposits or withdrawals.

To find - a) How much money was in the account after one year?

b) How much money was in the account after 4 years?

c) Was the amount of money earned in interest the same or different each year?

Proof -

Here given that,

Principal amount = $500

rate of interest = 4% = 4/100 = 0.04

Now,

a)

Amount = P [ 1 + RT ]

= 500 [ 1 + 0.04(1)]

= 500 [ 1 + 0.04] = 520

⇒Amount = $520

b)

Amount = P [ 1 + RT ]

= 500 [ 1 + 0.04(4)]

= 500 [ 1 + 0.16] = 580

⇒Amount = $580

c)

In 2nd year,

Amount = P [ 1 + RT ]

= 500 [ 1 + 0.04(2)]

= 500 [ 1 + 0.08] = 540

⇒Amount = $540

Now,

Interest in 1st year = 520 - 500 = 20

Interest in 2nd year = 540 - 520 = 20

So,

The interest amount is same each year