If we were to take that literally, the $100 is deposited at the end of the year. A tick of the clock later it is the beginning of the new year. At that time, 5% interest is paid on the entire amount, which would include that $100 that was just deposited. That is no way to run a business.
Also, the interest is paid, but it does not say whether it is paid into the account or paid out directly to the account holder.