Question

Jayden has $10 in a savings account. The interest rate is 5%, compounded annually.

To the nearest cent, how much interest will he earn in 2 years?
$
Submit

Answer 1

$1

Explanation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year,

then, solving our equation

I = 10 × 0.05 × 2 = 1

I = $ 1.00

The simple interest accumulated

on a principal of $ 10.00

at a rate of 5% per year

for 2 years is $ 1.00.