Question

1. Suppose you deposit $130 into a bank today, earning 2.5% interest. How much would you have after one year?

2. You expect to have $1,000 in one year. A bank is offering loans at 7.0 % interest per year. How much can you borrow​ today if you plan to use this money to repay the loan? Round to the nearest whole cent.

Answer 1

1.

Compute the account balance after 1 year, using the equation as shown below:

Future value = Present value*(1 + Rate)

                     = $130*(1 + 0.025)

                     = $133.25

Hence, the account balance after 1 year is $133.25.

Note: For question 2, please re-post the question separately.