Question

Josie has $4,000 in an account that earns 5% in interest compounded annually.
To the nearest cent, how much interest will she earn in 1 year?

Answer 1

Answer:

• Josie will earn $200.00 in 1 year

Step-by-step explanation:

Given

• Investment P = 4000,
• Interest rate r = 5% = 0.05,
• Number of compounds n = 1,
• Time t = 1,
• Interest I = ?

Solution

Since n = 1, the equation for interest is:

• I = Pr

Find I

• I = 4000*0.05 = 200