# If the interest rate on a savings account is 0.018%, approximately how much money do you need to keep in this account for 1 year to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

Question

Answer:

We are not told how often the interest is compounded, so assuming it is compounded yearly, you need to keep $9.99 in the account to pay the fee.Explanation:

Compound interest follows the formula A=p(1+r)^t,

where:

A is the total amount in the account,

p is the amount of principal,

r is the interest rate as a decimal number,

and t is the number of years.

For our problem:

A = 9.99,

p is unknown,

r = 0.018% = 0.00018,

and t=1.

This gives us:

9.99=p(1+0.00018)^1;

9.99=p(1.00018).

Divide both sides by 1.00018:

9.99=p.

solved

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