Question

You have $ 400 and a bank is offering 4.0 % interest on deposits. If you deposit the money in the​ bank, how much will you have in one​ year?

Answer 1

Answer:

I will have $416 in a year's time.

Explanation:

In calculating the amount in the deposits account in one year's time I used the Future Value formula,which is FV=PV*(1+r)^n

PV is present value=$400

r=rate=4%

n=year=1

FV=400(1+0.04)^1

FV=$416

Alternatively, one could calculate 1 year interest on the principal by multiplying it by 4% ,then add the interest of $16 to principal of $400.