suppose ana is an avid reader and buys only mystery novels. ana deposits $1,000 in a bank account that pays an annual nominal interest rate of 5%. assume this interest rate is fixed—that is, it won't change over time. at the time of her deposit, a mystery novel is priced at $10.00.

1 answer

a) How much interest will Ana earn in a year?

Using the simple interest formula, we can calculate the interest earned in a year as:

Interest = Principal x Rate x Time

Where Principal is the amount deposited, Rate is the nominal interest rate, and Time is the number of years. So, we have:

Interest = 1,000 x 0.05 x 1
Interest = $50

Therefore, Ana will earn $50 in interest in a year.

b) How many mystery novels can Ana buy with the interest earned in a year?

If a mystery novel costs $10, we can divide the interest earned by the cost of a book to find out how many books Ana can buy. So, we have:

Number of books = Interest earned / Cost of one book

Number of books = $50 / $10
Number of books = 5

Therefore, Ana can buy 5 mystery novels with the interest earned in a year.