Question

Erik has $50 in a savings account that earns

5% annually. The interest is not compounded. How much will he have in 1 year?

Answer 1

`\$52.50`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=1\ year\\ P=\$50\\ A=?\\r=5\%=5/100=0.05`

substitute in the formula above

`A=50(1+0.05*1)`

`A=50(1.05)`

`A=\$52.50`