Suppose you deposit $275.00 in your savings account on December 31.
Your bank pays 3 percent annual interest on savings accounts. If you do not
deposit any more money into the account, what would be the balance on
December 31 of the following year?
275 * 1.03 = ?
283.25
To calculate the balance on December 31 of the following year, we need to add the interest earned to the initial deposit.
Step 1: Calculate the interest earned
Interest = (Amount * Rate) / 100
Where:
- Amount = $275.00 (initial deposit)
- Rate = 3% (annual interest rate)
Interest = (275 * 3) / 100
Interest = 8.25
Step 2: Add the interest earned to the initial deposit
Balance = Initial deposit + Interest
Balance = $275.00 + $8.25
Balance = $283.25
Therefore, the balance on December 31 of the following year would be $283.25.
To find the balance on December 31 of the following year, we need to calculate the interest earned on the initial deposit and add it to the original deposit.
1. Calculate the interest earned:
- The bank pays 3 percent annual interest, which means the interest rate is 3% or 0.03.
- Multiply the interest rate (0.03) by the initial deposit ($275.00) to find the interest earned: 0.03 * $275.00 = $8.25.
2. Add the interest earned to the initial deposit to find the balance on December 31 of the following year:
- Add the initial deposit ($275.00) to the interest earned ($8.25): $275.00 + $8.25 = $283.25.
Therefore, the balance on December 31 of the following year would be $283.25.