Stella deposits $4,500 in a savings account at a bank that offers interest of 4.7% on such accounts. What is the value of the money in her savings account in one year's time?

Question

BlackTom AI · Accepted Answer

First, establish the basic calculation at play: simple interest or compound? The problem describes a savings account with a stated interest rate of 4.7% on such accounts over one year, which typically implies annual compounding once per year, i.e., final amount = principal × (1 + rate).
Option A: "$4,712". To check, compute 4500 × 1.047 = 4500 × (1 + 0.047) = 4500 + (4500 × 0.047) = 4500 + 211.5 = 4711.5. Depending on rounding rules, this may be shown as $4,711.50 or rounded to $4,712. The listed amount of $4,712 aligns with usual rounding to the nearest cent or dollar, so this option is consistent with the calculation and common financial reporting.
Option B: "$2,268". This value would result from either using a much smaller growth factor or misplacing the decimal, e.g., 4500 × 0.503 or 4500 ÷ something, which does not reflect the 4.7% growth over one year. It clearly ignores the principal increase and is not plausible for one-year growth at 4.7%.
Option C: "$6,597". This would come from applying a much higher growth than 4.7% in one year, or compounding more than once with a high rate, which is inconsistent with the given rate and one-year horizon. It overstates the growth by a sizable margin.
Option D: "$4,298". This shows a decrease relative to the original deposit, which would imply a negative return or withdrawal, contradicting the stated positive interest rate for a savings account over one year.

In summary, Option A is the only choice that aligns with the standard interest computation for one year at 4.7% on a $4,500 principal, with the usual rounding conventions producing approximately $4,711.50, often presented as $4,712 in common formats. The other options reflect misapplications of the rate, incorrect rounding, or misinterpretations of the one-year, positive-interest scenario.

Stella deposits $4,500 in a savings account at a bank that offers interest of 4.7% on such accounts. What is the value of the money in her savings account in one year's time?

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