You have $100 and a bank is offering 6.0% interest on deposits. If you deposit the money in the bank, how much will you have in one year?
Question
You have $100 and a bank is offering 6.0% interest on deposits. If you deposit the money in the bank, how much will you have in one year?
Solution
To calculate the amount of money you will have in one year, you need to apply the formula for simple interest, which is:
A = P(1 + rt)
where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal).
- t is the time the money is invested for, in years.
Given that P = $100, r = 6.0% = 0.06 (you need to divide the percentage by 100 to convert it to a decimal), and t = 1 year, you can substitute these values into the formula:
A = 100(1 + 0.06) A = 106
So, if you deposit 106 in one year.
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