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# \$400 is placed in an account earning an annual interest rate

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\$400 is placed in an account earning an annual interest rate [#permalink]  08 Oct 2020, 04:37
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Question Stats:

80% (00:54) correct 20% (00:38) wrong based on 10 sessions
\$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
[Reveal] Spoiler: OA

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Re: \$400 is placed in an account earning an annual interest rate [#permalink]  08 Oct 2020, 07:32
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first year the interest will be = 400*1.06=424

interest is 424-400=24

for second year it was compounded so =424*1.06=449.44

interest is 449.44-424=25.44

difference in interest got= 25.44-24=1.44

so 1.44 more interest

option D is correct
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Re: \$400 is placed in an account earning an annual interest rate   [#permalink] 08 Oct 2020, 07:32
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