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Leaving that same money for a second year at 4% gives a balance of:
A1,081.60
B1,080.00
C1,084.00
D1,076.00
Answer & Solution
Correct answer: A. 1,081.60
1. The second year earns on 1,040, not 1,000.
2. That gives 41.60 of interest.
3. The balance is 1,081.60.
_Source: OpenStax Principles of Finance 2e, Chapter 7, Time Value of Money I._
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