Steven recently won $1 in the scratch-n-play lotto. His banker,

Marianne, promises to pay him 1% per month if he will invest his money

in her bank for 5.5 years.

Part A: How much interest will Steven have earned after one year?

Note that there are 12 compounding periods in one year. Write your

answer as a percent rounded to two decimals, but don't include the

percent sign (. e. 0.1234321 should be written as 12.34).

Question

Mathematics

Madonna

15 October, 03:23

Steven recently won $1 in the scratch-n-play lotto. His banker,

Marianne, promises to pay him 1% per month if he will invest his money

in her bank for 5.5 years.

Part A: How much interest will Steven have earned after one year?

Note that there are 12 compounding periods in one year. Write your

answer as a percent rounded to two decimals, but don't include the

percent sign (. e. 0.1234321 should be written as 12.34).

+4

Answers (1)

Know the Answer?

Pierre Wells · Answer 1

101.00

Step-by-step explanation:

Given:

P=principal=$1

r=rate=1%=0.01

n=number of periods=12

t=time=1

Compound Interest (A) = P (1+r/n) ^nt

=$1 (1+0.01/12) ^12*1

=$1 (1+0.00083) ^12

=$1 (1.00083) ^12

=$1 (1.0100055)

=$1.0100055

Approximately

101.00