Mr. Stallworthy opened up a college savings account for his daughter at the local bank. He put $1,750 in the account, which pays 5 1/2% in yearly interest

Question

How much will Mr. Stallworthy have earned in interest one year from now?

 

If he leaves his money and intrest in the bank for another year, how much intrest will he earn for the second year? Round your answer to the nearest hundredths plac. 

Answer 1

i = prt

i = 1750(.055)(1)

i = $96.25

 

i = 1846.25(055)(1)

i = $101.54

 

 

Answer 2

1750(0.055) = $96.25 The problem implies compound interest, meaning he gains interest every year after on the $1750 plus interest already gained. With simple interest, he'd gain interest only on the $1750 every year. (1750 + 96.25)0.055 = you tell me