Concept explainers
Account 1: You deposit $1,000 into an account that pays 5% simple interest on that $1,000 each year.
Account 2: You deposit $1,000 into an account that pays 5% of the account balance at the beginning of the current year in interest each year.
This is the calculation used to find the amount after the first year in either account:
Amount | = | $1,000 |
|
0.05($1,000) |
Pervious Amount |
Plus | 5% of Pervious amount |
Can you think of a way to simplify the calculation so that all you have to do is one multiplication?
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