Question

John has $1 in a savings account that earns 5% interest compounded annually

to he nearest cent how much interest will he earn in 3 years

Answer 1

16 cents

Explanation:

A = P (1 + r)n

A = $1 (1 + 0.05)3

A = $1 x 1.16

A = $1.16

To find the compound interest only;

Compound Interest = Final Value - Initial Value

Compound Interest = $1.16 - $1

Compound Interest = $0.16

Hence the compound interest John will earn in his savings account will be 16 cents.