If $40,000 Is Deposited in a Savings Account Paying Interest

question 33

Multiple Choice

If $40,000 is deposited in a savings account paying interest of 4% compounded annually, what amount will be in the account at the end of 5 years?

• A) $32,878
• B) $48,000
• C) $48,620
• D) $48,666

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Definitions:

Income

The total amount of money earned or received by an individual or group, typically within a specified period, from work, investments, or other sources.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, illustrating the impact of the next dollar of earned income on their tax liability.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the percentage of income that goes to taxes.

Taxable Income

The portion of an individual's or a corporation's income that is subject to taxes by governmental authorities.