Select The Correct Answer From Each Drop-down Menu.Maite Has Money In An Interest-bearing Account. The Table Shows How Much Money Is In The Account At The End Of Each Year.$\[ \begin{tabular}{|c|c|} \hline Year & Amount \\ \hline 1 & \$1,000.00
Introduction
In this article, we will delve into the concept of interest-bearing accounts and how to calculate the interest earned over a period of time. We will use a table to represent the amount of money in the account at the end of each year and analyze the data to determine the correct answer from each drop-down menu.
The Table
The table below shows the amount of money in Maite's interest-bearing account at the end of each year.
| Year | Amount |
|---|---|
| 1 | $1,000.00 |
| 2 | $1,050.00 |
| 3 | $1,102.50 |
| 4 | $1,157.63 |
| 5 | $1,215.51 |
Calculating Interest
To calculate the interest earned, we need to find the difference between the amount at the end of each year and the initial amount. Let's calculate the interest for each year.
- Year 1: $1,050.00 - $1,000.00 = $50.00
- Year 2: $1,102.50 - $1,050.00 = $52.50
- Year 3: $1,157.63 - $1,102.50 = $55.13
- Year 4: $1,215.51 - $1,157.63 = $57.88
- Year 5: $1,000.00 (initial amount) + $50.00 + $52.50 + $55.13 + $57.88 = $215.51
Analyzing the Data
From the table, we can see that the amount in the account increases by $50.00 in the first year, $52.50 in the second year, $55.13 in the third year, $57.88 in the fourth year, and $57.88 in the fifth year. This suggests that the interest earned is increasing by a fixed amount each year.
Selecting the Correct Answer
Based on the analysis, we can conclude that the correct answer from each drop-down menu is:
- Year 1: $50.00
- Year 2: $52.50
- Year 3: $55.13
- Year 4: $57.88
- Year 5: $57.88
Conclusion
In this article, we analyzed the data from Maite's interest-bearing account and calculated the interest earned over a period of time. We used the table to represent the amount of money in the account at the end of each year and determined the correct answer from each drop-down menu. This analysis demonstrates the importance of understanding interest-bearing accounts and how to calculate the interest earned.
Discussion
The discussion category for this article is mathematics, as it involves the analysis of financial data and the calculation of interest earned.
Key Takeaways
- Interest-bearing accounts can earn interest over a period of time.
- The interest earned can be calculated by finding the difference between the amount at the end of each year and the initial amount.
- The interest earned can increase by a fixed amount each year.
Recommendations
- For individuals with interest-bearing accounts, it is essential to understand how to calculate the interest earned and how to analyze the data to make informed decisions.
- Financial institutions should provide clear information about the interest rates and how they are calculated to help customers understand their accounts better.
Future Research
- Further research can be conducted to analyze the impact of different interest rates on the interest earned over a period of time.
- The analysis can be extended to include other types of financial instruments, such as stocks and bonds.
Frequently Asked Questions: Understanding Interest-Bearing Accounts ====================================================================
Q: What is an interest-bearing account?
A: An interest-bearing account is a type of savings account that earns interest over a period of time. The interest is calculated based on the principal amount deposited and the interest rate offered by the financial institution.
Q: How is interest calculated on an interest-bearing account?
A: Interest is calculated by multiplying the principal amount by the interest rate and the time period. The formula for calculating interest is:
Interest = Principal x Rate x Time
For example, if you deposit $1,000 into an account with an interest rate of 5% per annum, the interest earned in one year would be:
Interest = $1,000 x 0.05 x 1 = $50
Q: What is the difference between simple interest and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal amount and the accrued interest.
For example, if you deposit $1,000 into an account with a simple interest rate of 5% per annum, the interest earned in one year would be:
Interest = $1,000 x 0.05 = $50
If you deposit $1,000 into an account with a compound interest rate of 5% per annum, the interest earned in one year would be:
Interest = $1,000 x 0.05 = $50 Accrued interest = $50 Total interest = $50 + $50 = $100
Q: How can I maximize my interest earnings on an interest-bearing account?
A: To maximize your interest earnings, you can:
- Deposit a larger principal amount
- Choose an account with a higher interest rate
- Consider a compound interest account
- Avoid withdrawing or depositing funds frequently, as this can reduce the interest earned
- Consider opening multiple accounts to spread your deposits and earn interest on each account
Q: What are the benefits of an interest-bearing account?
A: The benefits of an interest-bearing account include:
- Earning interest on your deposits
- Building savings over time
- Having a liquid account for emergency funds
- Avoiding high-interest debt
- Building credit history
Q: What are the risks associated with an interest-bearing account?
A: The risks associated with an interest-bearing account include:
- Inflation: The interest earned may not keep pace with inflation, reducing the purchasing power of your savings.
- Market fluctuations: The interest rate may change, affecting the interest earned.
- Fees: Some accounts may charge fees for maintenance, overdrafts, or other services.
- Risk of loss: If the financial institution fails, you may lose your deposits.
Q: How can I choose the right interest-bearing account for my needs?
A: To choose the right interest-bearing account, consider the following factors:
- Interest rate: Look for an account with a competitive interest rate.
- Fees: Check for any fees associated with the account.
- Minimum balance requirements: Consider an account with a low or no minimum balance requirement.
- Liquidity: Choose an account that allows easy access to your funds.
- Credit score: Consider an account that reports to the credit bureaus to help build your credit history.
Q: Can I withdraw my money from an interest-bearing account at any time?
A: Yes, you can withdraw your money from an interest-bearing account at any time. However, be aware that:
- Early withdrawal may result in penalties or fees.
- Withdrawing funds may reduce the interest earned.
- Some accounts may have restrictions on withdrawals, such as a minimum balance requirement.
Q: How can I track my interest earnings on an interest-bearing account?
A: To track your interest earnings, you can:
- Check your account statements regularly.
- Use online banking or mobile banking apps to monitor your account activity.
- Set up notifications for interest earned or account activity.
- Consider using a budgeting or financial planning tool to track your interest earnings.