Question

If your bank pays 5.5 percent interest on savings deposits, what is the simple interest paid in the third year on an initial $100 deposit?
What is the total amount in the account after three years?
What is the amount after three years if the interest was compounded annually?

Answer 1

the same as every other year: .055*100 = 5.50

100(1+.055*3) = 116.50

100(1.055)^3 = 117.42