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Alex deposited x dollars into a new account that earned 8

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Re: Alex deposited x dollars into a new account that earned 8  [#permalink]

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New post 20 Sep 2019, 00:27
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shreyagupta1401 wrote:
yonseiglobalstudent wrote:
BrainLab wrote:
See attachment for the solution



I just want to clarify one point. I follow up until the start of the 2nd year, but then why do we multiply again by 1.08? (2.08x)(1.08)
Where did the 1.08 come from? I believe we need to represent 8% of 2.08x, but why don't we multiply by .08 instead?


I have the same question. Can someone please explain clearly why we are multiplying by 1.08 and not 0.08 at the end of the second year?


Interest earned at the end of the second year would be 2.08x*0.08 but the balance at the end of the second year would be (amount at the beginning of the second year) + (interest earned in second year) = 2.08x + 2.08x*0.08 = 2.08x*1.08.

Hope it's clear.
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Re: Alex deposited x dollars into a new account that earned 8   [#permalink] 20 Sep 2019, 00:27

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