Compounding The APY of a savings account is the percentage increasein the balance over the course of a year. Suppose you deposit $500 in a savings account that has an APY of 6.18% per year. Assume the interest rate remains constant and no additional deposits or withdrawals are made. How long will it take the balance to reach $2500?
Compounding The APY of a savings account is the percentage increasein the balance over the course of a year. Suppose you deposit $500 in a savings account that has an APY of 6.18% per year. Assume the interest rate remains constant and no additional deposits or withdrawals are made. How long will it take the balance to reach $2500?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Compounding The APY of a savings account is the percentage increase
in the balance over the course of a year. Suppose you deposit $500 in a savings account that has an APY of 6.18% per year. Assume the interest rate remains constant and no additional deposits or withdrawals are made. How long will it take the balance to reach $2500?
Expert Solution
Step 1
SI =
where SI is simple interest
P is Principal amount
r is rate
t is time
SI = A - P
where A is the amount and P is principal
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