Problema Solution
Elliot deposits $20,000 in a saving account . If this account earns interest at an annual rate of 1.8% , how much money will Elliot earn at the end of 2 years ?
Multi choice answer : A) $360 B) $720 C)$20,360 D)$20,720
Explain Answer please .
Answer provided by our tutors
Deposit: $20,000
After 1st year: 20,000 + 0.018*20,000 = 1.018*20,000
After 2nd year: 1.018*20,000 + 0.018*1.018*20,000 = (1.018)^2*20,000 = $20,726.48
He will earn: $20,726.48 - $20,000 = $726.48