Suppose you invest $100.00 into an account that earns .05% ?

Question

suppose you invest $100.00 in an account that earns 0.05% each month you make no withdrawls or depositsinto the account.how much intrest do you ake the second month? i need to know the steps to doing a problem like this?

Answer 1

amount of money = Principal X ( 1 + (interest rate / number of times compounded per year)) ^ (number of years * number of times per year)

a = p(1+(r/n))^(n*t)

Answer 2

Assuming compound interest, the 1st month you make 5 dollars, the second you make $5.25.

100 X .05 = 5

105 X .05 = 5.25

Answer 3

Do you mean 5% annual interest compound monthly? (5% interest per month would be 60% interest per year! Please tell me where you do your banking!)

5% interest is calculated like this: $100 x .05 x 1/12 =  42 cents the first month. Note: the annual interest is 5%, but the monthly interest is 5% divided by 12 months = .41666% This assumes interest is compound monthly. If it is compound annually, there would be $0 interest the first month and you would earn $5 at the end of the year.

The second month would be $100.42 x .05 x 1/12 = 42 cents (.4184166 rounded up).

Answer 4

The first 2 answers are way off (they forgot to divide % by 100 for a decimal number)

100 * 1.0005 = 100.05

100.05 * 1.0005 = 100.10

So each month earn 5 cents interest to the nearest penny

Answer 5

at http://www.100KFX.com investor would make much much more than just 0.05% per month