SOLUTION: An investor deposits $1000 into a bank account that pays interest at the rate of 10% per year(payable at the end of each year). She leaves the money and all accrued interest in the

Question 350966: An investor deposits $1000 into a bank account that pays interest at the rate of 10% per year(payable at the end of each year). She leaves the money and all accrued interest in the account for five years a)How much money does she have after one year? b) How much money does she have at the end of year five? c) If the bank instead paid only 6% interest, how much less money does she have after year 1 and year 5?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
An investor deposits $1000 into a bank account that pays interest at the rate of 10% per year(payable at the end of each year). She leaves the money and all accrued interest in the account for five years a)How much money does she have after one year? b) How much money does she have at the end of year five? c) If the bank instead paid only 6% interest, how much less money does she have after year 1 and year 5?
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1 Year Total with 10%:
A(1) = 1000(1+0.10) = $1100
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5 Year total with 10%:
A(5) = 1000(1+(0.10/1))^5 = $1610.51
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1 Year Total with 5%:
A(1) = 1000(1+0.05) = $1050.00
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5 year Total with 5%:
A(5) = 1000(1+0.05)^5 = $1276.28
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Cheers,
Stan H.
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