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20 January, 23:49

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?

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  1. 21 January, 01:04
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    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.
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