Question

Lola has $70 in an account that earns 10% interest compounded annually.

To the nearest cent, how much interest will she earn in 1 year?
Use the formula B=p(1+r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
$

Answer 1

Answer: Lola will earn $77 as interest.

Explanation:

B = P*(1+r)^t is the formula for compound interest .

Where, 'B' is the principal amount after interest earned.

'P' is Principal amount (which here is $70).

'r' is the rate of return or interest rate(which here is 10%).

't' is time period for which account earns interest.(which here is 1 year).

so putting the values we get

70*(1 + 10/100 ) ^ 1 here 10% (=r) is converted from percentage to . number after dividing by 100.

Which amount to 70*(1+ 0.1)^1

= 70*1.1

=$77 which is total amount after one year .