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07 Aug 2025, 07:10
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
90% (01:17) correct
10% (00:32) wrong based on 10 sessions
History
Date
Time
Result
Not Attempted Yet
$400 is placed in an account earning an annual interest rate of 6%. If the account is compounded annually, how much more interest is earned in the second year than in the first?
A. $1.22
B. $1.33
C. $1.43
D. $1.44
E. $1.54
A. $1.22
B. $1.33
C. $1.43
D. $1.44
E. $1.54
16 Aug 2025, 03:15
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Official Explanation
In year one, the account earned 6% of $400 in interest. That is, .06 × 400, or $24. When the interest is “compounded,” this $24 is reinvested in the account, which will then hold 400 + 24 = $424. In year two, the interest is 6% of $424, or .06 × 424, which equals $25.44. The year two interest is greater by 25.44 - 24 = $1.44, (D).
Answer: D
In year one, the account earned 6% of $400 in interest. That is, .06 × 400, or $24. When the interest is “compounded,” this $24 is reinvested in the account, which will then hold 400 + 24 = $424. In year two, the interest is 6% of $424, or .06 × 424, which equals $25.44. The year two interest is greater by 25.44 - 24 = $1.44, (D).
Answer: D
