Question

Ruiz invests $55 at a simple interest rate of 4%. How much interest will he earn after 5 years?

$11

$110

$1,100

$11,000

Answer 1

To answer this item, I assume that it is compounded yearly such that the amount of interest (I) from the given present worth (P), interest rate (i) and the number of years (n) is calculated through the equation,
I = P x (1 + i)^n - P
Substituting,
I = ($55) x (1 + 0.04)^5 - $55
I = 11.91
The answer is nearest to the first choice, $11.