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
general 2 months ago 7556