(Q12 IN TYPE B) HOW MUCH INTEREST WILL BE EARNED IN THE THIRD YEAR...

7. (Q12 in Type B) How much interest will be earned in the third year if $1,000 is deposited that earns 8% interest compounded annually? A) $ 70.00 B) $ 93.31 C) $105.62 D) $140.00 Solution B. The deposit grows to $1000 x 1.07 = $1080 at the end of the first year, $1166.40 at the end of the second year, and $1259.71 at the end of the third year. The difference between $1259.71 - $1166.40 = $93.31