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sarah_98

  • 3 years ago

ryan puts $500 into a bank account. the bank pays 5% compound interest per year. how much is the interest after one year?

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  1. ParthKohli
    • 3 years ago
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    Continuous compounding. \( \color{Black}{\Rightarrow 500(1 + 0.05) \large^n }\)

  2. ParthKohli
    • 3 years ago
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    \(n\textbf{ is the number of years.}\)

  3. sarah_98
    • 3 years ago
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    ok

  4. ParthKohli
    • 3 years ago
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    \( \color{Black}{\Rightarrow 500(1.05)^1 }\) \( \color{Black}{\Rightarrow 500 \times 1.05 }\)

  5. sarah_98
    • 3 years ago
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    $525?

  6. sarah_98
    • 3 years ago
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    is it?

  7. ParthKohli
    • 3 years ago
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    This is compounded interest.

  8. sarah_98
    • 3 years ago
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    im confused :s

  9. ParthKohli
    • 3 years ago
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    And yes it is $525 :)

  10. sarah_98
    • 3 years ago
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    oh ok there's part 2

  11. ZhangYan
    • 3 years ago
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    lol sorry parth read mistake ;)

  12. ParthKohli
    • 3 years ago
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    Interest = Amount - Principal Interest = 525 - 500 Interest = 25

  13. sarah_98
    • 3 years ago
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    work out the total amount he has in his bank account after 2 yrs

  14. ParthKohli
    • 3 years ago
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    @ZhangYan if it's one year then both simple and compound may apply :) so your answer is correct but not the method :S

  15. sarah_98
    • 3 years ago
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    work out the total amount he has in his bank account after 2 yrs

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