If Your Bank Offers a 5% Annual Rate of Return

question 115

Essay

If your bank offers a 5% annual rate of return compounded annually,then at the end of one year your $1,000.00 deposit would grow by $50.00 to $1,050.00.However,in the second year,your deposit would increase by $52.5025 to a total ending value of $1,102.50.Explain why the second year earns more interest on the investment than the first year.

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Definitions:

Quantitative Research

Research that deals with objectively measurable data.

Objectively Measurable

Refers to characteristics or attributes that can be quantified or evaluated through unbiased methods.

Data

Information that has been collected, often observed, measured, or retrieved, for the purpose of analysis and making conclusions.

Case Study

Study of a single subject, such as an individual or family.